Sept. 11 (Bloomberg) -- Myer Group Pty, Australia’s biggest department store chain, is planning an initial public offering as its turnaround under buyout firm TPG Inc. gathers pace.

Net income from department stores rose 15 percent to A$109 million ($94 million) in the 12 months ended July 25, Melbourne- based Myer said in a statement today, beating its June forecast for “mid to high single digit” growth. A prospectus for the IPO is expected to be lodged with regulators on Sept. 28, the company said without providing further details.

Since teaming with Myer family members and Blum Capital to buy the retailer in 2006 for A$1.4 billion, TPG has revamped the way stores are supplied, added private label clothes and retrained staff to sell more profitable products. A new system will be implemented to cut the amount of time it takes to process sales as the retailer extends store refurbishments.

“Myer has come through pretty well,” said Sean Fenton, who helps manage $324 million at Tribeca Investment Partners in Sydney. “Investors really are looking for operational improvements in the stocks coming back to the market.”

The company may be worth between A$2 billion and A$3 billion, Fenton said.

Employees and members of the Myer store loyalty program will be able to register for a copy of the prospectus, which will detail the price and size of the initial share sale, Chief Executive Officer Bernie Brookes said in the statement today.

“We have achieved significant improvements in the look, feel and standards of our stores,” Brookes said. “We’ve executed an enormous amount in terms of fundamental business improvement.”

Debenhams, Neiman Marcus

Selling Myer wouldn’t be the first time Fort Worth, Texas based TPG has returned a retail asset to the market.

In 2006, TPG and other investors held an 1.05 billion pound ($1.7 billion) IPO for Debenhams Plc, three years after acquiring the U.K.’s second-largest department store chain for 1.72 billion pounds.

The buyout firm, which was founded by David Bonderman and formerly known as Texas Pacific Group, also owns Neiman Marcus Group Inc. after teaming with Warburg Pincus LLC in 2005 to buy the U.S. chain for $5.1 billion in 2005.

Myer sales fell 1.8 percent to A$3.3 billion during the period. In the first six weeks of the current year, revenue has risen above the company’s forecast for 3 percent growth in fiscal 2010, Myer said.

Earnings before interest and tax are forecast to rise about 10 percent after posting 11 percent growth in fiscal 2009.

The company’s margin, which measures EBIT as a proportion of sales, increased to 7.23 percent. When the business was acquired in 2006, the margin was about 2 percent.

Second-ranked David Jones Ltd., which reports earnings on Sept. 24, has a margin of more than 10 percent.

Net debt at Myer fell to A$694 million, compared to A$979 million when it was bought, with no payment due until June 2012, the company said today.

Myer operates 65 stores across Australia and is targeting a network of 80 by 2014. Leases have been signed at 12 shops with a further three under negotiation.

To contact the reporter on this story: Robert Fenner in Sydney rfenner@bloomberg.net

Last Updated: September 11, 2009 01:46 EDT