Not much is going to rain on Myer’s parade. Following a difficult year for some retailers, Myer has reported a 14.8% lift in full year profit — better than guidance. And in what will be the largest IPO since the credit crisis began, Myer will list on the ASX later this year.

This is a continuing and dreadful indictment of the former leadership of Myer and its parent company Coles Myer.

Myer achieved an EBIT of 7.2% of sales. Their stated aim is for “world’s best practice EBIT” of 10% of sales. There is no quick way to do this. No Tattslotto solution. It is only achievable by making hundreds of small changes. Bernie Brookes’ group has cut Myer’s cost of doing business from 35% to around 29%, largely by removing some of the bizarre practices of the former management. This has lifted EBIT from the 2% they inherited on acquisition.

Myer is 39 months into a 50 month turnaround phase and the leadership team has done a superb job. Further EBIT growth of 10% is forecast, with a 3% lift in sales.

Along with all the initial investors, Brookes will do very nicely out of the float. His initial investment will have multiplied around tenfold.

A prospectus will be issued towards the end of September. To some extent, TPG’s reputation is on the line here. Their float of Debenhams (UK) ended in tears for investors and TPG will want to demonstrate that they can float a company and leave some growth and potential in the bag for new investors. It is probable that they will leave room for a stag profit of 5% with scope for continuing long-term upside.

Myer believes it has continued to gain department store market share with customers responding well to offers, revitalised presentation, in-stock availability and of course the government stimulus dollars.

The challenge is to keep up this performance without the help of stimulus dollars in a climate of rising interest rates.