Solomon Lew has launched his latest attack against the management and board of Myer, saying the department store is spiraling down without a strategy for recovery, destroying shareholder value and putting at peril a great Australian company.
His Premier Investments, which is the largest single shareholder of Myer with a 10.8% stake, is now directly canvassing shareholders to have the chairman, Chairman Garry Hounsell, and board of directors replaced.
His attack comes after the departure last week of Richard Umbers, who stepped down as CEO of a retail chain bleeding sales.
Today Lew noted that Umbers was being replaced by the “discredited Chairman, Mr Hounsell, who has no real retail experience, and whose only role as CEO was at the collapsed accounting firm, Arthur Andersen Australia.”
At the close, Myer shares were down 5.4% to $0.52. They were priced at $4.10 for the Myer IPO in 2009.
Earlier this month the department store issued a profit warning, its third since July 2017, and reported another drop in sales, worsening over the key Christmas period and New Year sales.
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.
In a letter to Myer shareholders, Lew says any remaining doubt that Myer is in danger should now be removed from the minds of all of shareholders.
The start of the letter to shareholders:
“It is clear from Mr Umbers’ departure that not only the Board-endorsed ‘New Myer’ strategy, but also the ‘New, New Myer’ strategy, are dead and buried,” he writes.
“Myer is now in genuine peril and we must act to save the company and what is left of our investments from the failed Myer Board.
“It is now clear to me that the entire Myer Board must be cleaned out if the company is to have any chance of surviving.”
Premier Investments now has an updated copy of the Myer share register which it will use to canvas shareholders to oust the current board. It plans a vote at an extraordinary general meeting (EGM).
“Over coming weeks, Premier will caucus with the other institutional shareholders in Myer to compose a totally-new Myer Board with a majority of independent directors,” says Lew.
“If we receive sufficient support from the institutional investors, this new Board will then be put to all Myer shareholders for voting as part of the EGM.
“Premier will pay for the costs of this EGM to spare our fellow Myer shareholders the expense. If the support we receive from the institutional investors is strong enough, we may not even need to hold an EGM to force the resignation of the current directors, but let’s wait and see.”