Deutsche Bank: 'It doesn't sound good' for Myer

Sam Tabone/WireImage

The departure of Myer’s CFO isn’t a good sign for the department store, according to analysis by Deutsche Bank.

In a major restructure at Myer, Grant Devonport will be stepping down as CFO to be replaced by Nigel Chadwick, the former head of finance for Spotless Group.

“The departure of a CFO after a relatively short tenure is rarely a good sign and this adds to the considerable loss of talent from Myer over recent years,” writes Deutsche Bank analyst Michael Simotas in a note to clients.

In another management move, Mark Cripsey, Myer’s Chief Digital and Data Officer, has been promoted to COO, reporting to CEO Richard Umbers.

“While we acknowledge the importance of data and Myer’s digital presence, physical stores still represent the majority of sales and earnings and the business will not succeed online or offline without the right brands and merchandising,” says the Deutsche Bank analyst.

“We believe there is a lack of merchandising experience in the senior leadership team.”

Deutsche Bank noted the restructure announcement didn’t include a market update but says “it doesn’t sound good”.

“Industry feedback implies Myer probably had a better finish to the Christmas selling period than what was implied by the mid-December downgrade but we believe it is still under pressure and is underperforming both speciality retailers and David Jones,” says Simotas.

“While there was no trading update provided, the CEO’s commentary seems downbeat, with the only positive being cost savings associated with the support office.”

UBS also is negative on retailers most exposed to a slowing consumer, in a structurally challenged industry and high fixed costs, such as Myer.

“We would also note that there is early evidence of retail slowing again in January following a strong end to 2017,” says UBS.

UBS believes the arrival of Amazon in Australia is both a threat and an opportunity.

“We believe Amazon will drive a better overall online experience for Australian consumers and accelerate the online penetration,” UBS says in a research note.

Amazon’s full impact is not likely to be felt until 2019, when it generates sufficient scale and rolls out its full prime offering.

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