Myer CEO Richard Umbers has stepped down as head of a department store chain bleeding sales and under attack by disgruntled shareholders.
Myer Chairman Garry Hounsell has been appointed executive chair with immediate effect. He will be paid but won’t get any of the usual executives bonuses.
He says a search will start immediately for a new Chief Executive Officer and Managing Director.
“We are impatient for a turnaround in the company’s performance and the Board has determined that it is in the interests of all shareholders for there to be a fresh approach to drive our future direction,” says Hounsell.
“At the time of my appointment as Chairman in November 2017, I said I was impatient and this announcement reflects my desire to drive, first-hand, the urgency required to deliver shareholder value.”
Umbers was appointed CEO in March 2015. Then Myer shares were then trading at around $1.40. Yesterday they closed at $0.535, giving a market cap of about $440 million.
In early trade today, Myer shares were 5% higher at $0.56.
Last week the department store issued a profit warning, its third sinceJuly 2017, and reported another drop in sales, worsening over the key Christmas period and New Year sales.
Asked for his thoughts on Myer just yesterday, veteran broker Richard Coppleson of Bell Potter said: “Avoid. Sell. It just is a dog.”
To underline the point, a Sydney-based retail analyst at a global investment bank said they had stopped publishing research on the company because it was a “bit of a waste of time from our perspective given how small the company is these days.”
And Myer doesn’t see an improvement in retail trading conditions during the second half. The company says net profit for the first half of 2018 would be “materially below” last year, between $37 million and $41 million.
Bricks and mortar retailers have been hit by a shift to digital, sagging consumer sentiment and more competition from global players, including Amazon, in Australia.
The Myer’s board of directors is also under attack by significant shareholder Premier Investments, controlled by billionaire Solomon Lew.
Premier, which owns Just Jeans, Portmans and Peter Alexander, is run by former David Jones CEO Mark McInnes.
“Premier strongly believes that a new Myer board with relevant expertise and experience in retail, property and business is required as a matter of urgency,” Premier said last week.
“It is not in the best interests of shareholders that the current Myer board be allowed to preside over another year of declining sales, eroding profits and further share price deterioration before urgently needed change is introduced at board level.”