The Premier Investments Limited (ASX: PMV) share price is on watch after increasing its stake in Myer Holdings Ltd (ASX: MYR).
Premier’s larger stake in Myer
Premier Investments has increased its stake in Myer to more than 15%.
Myer’s management have reached out to Premier and will also be reaching out to other major shareholders in relation to this change.
In the announcement, Myer reiterated that it delivered positive results in it’s first half of FY21 despite challenges with COVID-19 lockdowns and CBD traffic limitations present.
Myer said that it has “strengthened” its balance sheet through tighter inventory management and cash generation, improved range of products, growing its online business and reduced space.
Myer management comments
Myer Acting Chairman JoAnne Stephenson said: “As discussed at our Annual General Meeting, we are open to constructive and positive dialogue with all our major shareholders… The Board is open to discussing appropriate Board representation of Premier Investments through nomination to the Myer Board.
“We would need to be satisfied around any issues or potential conflict that Premier’s representation on Myer’s Board could create and whether they could be addressed through governance protocols or other means… We are keen to have Board matters resolved as soon as possible.”
Summary thoughts on Premier, Myer and the share price
It’s an interesting move by Premier to be investing in Myer in these times. Retail was already a precarious place before COVID-19 and the pandemic has accelerated the move to online retail away from bricks and mortar stores.
If Myer can overhaul its brand to be a competitive force in the luxury online space, it could make a modest profit. If this eventuates, it might prove to be a good move at the share price Premier bought its latest shares.
The increased holding by Premier in Myer has caused a bit of a flurry of the Myer share price over the past few days, increasing over 14%. The momentum may be coming to an end though with Myer’s share price down 1% at the time of writing.
