Struggling department store chain Myer has suffered a massive fall in its share price in the wake of a devastating revaluation from a leading analyst.
Myer shares had dropped more than 9 per cent to $1 by lunchtime with a brutal research note from Credit Suisse analyst Grant Saligari being fingered as one of the reasons.
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Myer earnings report
Retailer Myer is on track to deliver full-year profit growth, for the first time since 2010.
In the no-holds-barred note to clients, Mr Saligari said the arrival of TK Maxx and Amazon would create significant problems for Myer.
In the note, Mr Saligari lists the issues as including: "the entry of TK Maxx and Amazon, Myer's overly large store portfolio and, in the near term, a deteriorating spending environment".
"It is likely to be all too much for Myer," he said.
Myer is due to release its third quarter sales results on Thursday.
TK Maxx has landed in Australia with 35 stores converted from Trade Secret stores while Amazon recently formally confirmed its plans to tackle Australia.
"They are both selling premium branded product, with TK Maxx at significantly discounted prices," he said.
"Amazon is likely to accelerate a consumer spending shift to online - customer affinity being particularly strong in home wear, clothing and beauty - all with a high overlap with Myer."
Credit Suisse predicts Amazon could snap up a 10 per cent share of the clothing and non-electrical homewares market within five years.
Myer did not had a particularly effective online model with which to counter the threat and would probably have to accelerate store closures as it tried to cope and improve its digital sales effort dramatically, he said.
The company was already moving in this direction noting they were planning to cut two stores a year over the next two years, he said.
"The risk is that the starting point might be just too difficult, with the recent acceleration in competition," he said.
Mr Saligari slashed his target price for Myer from $1.44 to just 82 cents.
He noted that Myer takes up to seven days for a standard online delivery and up to five days for click and collect.
Mr Saligari said the main variables that could improve things for Myer would be an uptick in consumer spending or a move by Solomon Lew's Premier Investments to acquire the business.
Mr Lew launched an audacious raid on Myer's register in March and holds 11 per cent. He is yet to detail his plans for the investment.
Myer declined to comment.