Myer, which I’d argue has been in a slow structural decline for some time, is trying to revitalize its operations by acquiring Premier Investments' Apparel Brands segment, which includes Just Jeans, Jay Jays, Portmans, Dotti, and Jacqui-E.

The Apparel Brands collectively saw a 6.4% decline in sales for FY24 but remain well above pre-COVID levels. While they aren't in the same league as Smiggle or Peter Alexander in terms of performance, they are still relatively strong assets -- at least next to Myer's..

The Apparel Brands' EBIT margin stands at 9.7%, compared to Myer's 2.3%. So, while Myer has larger sales, its profitability seriously lags behind that of the Apparel Group.

As for Solomon Lew, although his personal stake in Myer will decrease slightly, he will remain the largest individual shareholder. The merger should create a stronger business overall, and Lew will also secure a seat on the board. And it leaves Premier with the best parts of its business.

My thumb suck based on the pro-forma numbers is that Myer is on a forward PE of (very) roughly 10. That's probably about right, but not nearly cheap enough for me.

Another day another 2 retailers post record profits.

JBH (electronics, home appliances) and SUL (leisure, apparel, auto)

Joins the long list of recent profit upgrades in the sector over the last few months:

- DSK (homeware, gifts)

- AX1( footwear)

- PMV (apparel, gifts)

- MHJ (jewellery)

- ADH (bedding, homeware)

- NCK (furniture)

- MOZ (older ladies)

- UNI (apparel).

Are you really prepared to short MYR right now? In this environment? Is the short thesis "every single retailer is pumping out superstar numbers, but MYR cannot?" 

I think MYR will actually produce the best set of numbers in the past 5 years. Their online store is growing faster than KGN and has twice the sales of TPW. 

The "problem" is 8% of the register is short (so 30-60 days of volume needed to fully exit) - these guys are trapped & no doubt panicking. They can't cover too quick or they will move the price up.

We need to squeeze them by the balls so they run for the exits. 

Not sure if anyone saw that happened to a "beaten down" brick and mortar retailer in the US, GameStop, over the past 2 days.

The shorts got squeezed so hard that the share price popped 100% over 2 days.

With ~8% short interest (equivalent to 30-60 days) worth of short covering stuck in MYR and a host of profit upgrades across the entire retail sector (homeware, apparel & cosmetics), shorts would be quite scared.

DSK AX1 NCK PMV MHJ ADH MOZ

ABS retail data for Nov 2020 reported 20% rise in sales for Department Stores. NAB retail data points to a buoyant Christmas.

Importantly, all retailers are reporting GP uplift of 1-5%.

My view is that at $250m market cap, there is at least $100m of NPAT that MYR can generate in FY21 (plus Jobkeeper).

For context, a 2% GP uplift for MYR is 2% * $3bn = $60m NPAT.

In terms of the profit opportunity available on offer for a contrarian investor, 10x $100m NPAT for a P/E of 10x is $1bn, compared with $250m.