The only thing preventing an even more catastrophic fall in Myer's share price is Solomon Lew and the possibility that he might seize this moment when Myer's position is weakened to strike with a takeover.
But that is probably a brave bet.
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Myer cuts profit guidance
Myer has cut its net profit after tax forecast for the fiscal 2017 year. Vision courtesy ABC News
Lew launched a sharemarket raid on Myer earlier this year and picked up just over 10 per cent of the stock using his investment company, Premier.
Since that time, Myer's share price has fallen from the $1.15 Lew paid to about 75¢, so he is down a cool $35 million since March.
But there has been a deathly silence from Lew's Collins Street bunker since Myer slugged the market with a profit downgrade, wrote down $45.6 million in the value of what had been its two flagship brands, and lost one of the architects of its turnaround strategy, deputy chief executive Daniel Bracken.
He is not publicly applying pressure by undertaking his own analysis of Myer's mistakes and releasing it to the media – a strategy he employed when he was a minority shareholder in Country Road.
While the extent of Myer's troubles clearly surprised some, it's a fair bet that Lew wasn't one of them.
Premier's various brands operate in the same market space as Myer, and Lew is in a position to understand Myer's challenges. Premier's ownership of Just Group, which has Dotti, Jay Jays, Portmans, Peter Alexander and Jacqui E in its portfolio, means it would appreciate just how tough it is in apparel retailing.
Some of Myer's problems are peculiar to it. The decision to avoid price markdowns in an environment where it is the Robinson Crusoe of the sector was always going to be dangerous. That has cost Myer market share.
Its strategy of making an investment directly into brands such as Topshop and, under a previous management regime, upmarket clothing group Sass & Bide, was clearly a mistake.
But its biggest underlying problem is the weak consumer market and excessive competition. Thus one would have to ask why Lew would want to invest hundreds of millions more in this retail environment, particularly when perhaps the biggest threat - Amazon - is yet to come.
The smart money says the motivation for Lew's March raid on Myer was his belief that South African retailer Woolworths – the owner of its largest competitor, David Jones – was sizing up the market for a tilt at Myer.
While the extent of Myer's troubles clearly surprised some, it's a fair bet that Lew wasn't one of them.
He could then use his 10 per cent stake to become kingmaker. He employed similar tactics in 2014 when Woolworths was vying for control of David Jones, in which Lew had a stake.
This would characterise Lew's move on Myer as one befitting a share trader more than a rag trader.
If a David Jones merger with Myer never happens, Lew could fall back to Plan B – use Premier to buy Myer and initiate a "New, New Myer" strategy using his inhouse retail experts, the former David Jones team of Mark McInnes and Colette Garnsey.
In the meantime, retail analysts have delivered a fresh set of earnings estimates for Myer.
Citi now estimates Myer's fourth quarter 2017 like-for-like sales fell 3.6 per cent and, like all major brokers, has revised earnings down for next year.
Others, including UBS, Macquarie and Goldman Sachs, have revised down estimates for Myer's profits up until 2019.
UBS said its downgrade "reflected the subdued trading conditions in consumer discretionary … trends will only deteriorate from here, underpinned by: i) Rising fuel and electricity costs; ii) Out of cycle interest rate increases; and, iii) A softening housing market, with Myer the most leveraged of any of the mid-large cap discretionary retailers".
It said this, "coupled with a more competitive market and a high level of industry discounting (margin pressure), paints a sombre outlook for Myer".
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