Department store giant Myer has confirmed that it will float on the Australian Securities Exchange before the end of the year in what is likely to be the biggest float in the last 18 months.
Myer, which was purchased by a consortium led by private equity group TPG and the Myer family in 2006 for $1.4 billion, plans to lodge its prospectus on 28 September. No date has been set for the listing, but it is expected in late October or early November.
Myer has refused to give further details on the float, but analysts are tipping the company will be valued between $2.5 billlion and $3 billion. Myer’s great rival David Jones has a market capitalisation of around $2.5 billion.
The announcement of the float coincided with the release of its 2008-09 profit results, which indicate the company’s turnaround is gathering momentum. While full-year sales fell 1.8% to $3.261 million, net profit for the financial year to 25 July was $109 million, up 14.8% on 2008 and ahead of forecasts.
Earnings before interest and tax increased 10.6% to $236 million.
“These results, against the backdrop of a very tough retail trading environment, are testament to the work being done during the turnaround phase to build a flexible, efficient and sustainable platform for the future,” Myer chief executive Bernie Brookes said in a statement to the ASX.
Myer is forecasting sales growth of 3% and EBIT growth of around 10% for 2010 and says sales in the first six weeks of trading are above the 3% target.
Delivering on the growth phase of Myer’s turnaround program will be crucial to the success of the float. Given Myer’s private equity managers have done a great job of stripping costs out of the business, potential investors in the company will want to know there is still plenty of room for profit growth.
Myer plans to add 15 new stores to its 65-store network by 2014, with two stores currently under construction. The company will also look to push more sales through its Myer One loyalty program, which currently has 3.1 million members and accounts for 63% of Myer sales.
According to one report in the Australian Financial Review, investors in the float may be required to sign up to Myer One as part of an extra membership push.
In other Myer news, model Jennifer Hawkins has signed up as Myer’s brand ambassador for the next four years, with a salary that has been reported to be more than $1 million per year.
Hawkins is one of around 400 Myer staff who owns shares in the company; this group controls around 7.5% of the company.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
