Terry McCrann: Myer chief executive gets the boot, chairman set to follow

THE future of what was once Australia’s dominant department store retailer and easily the most profitable among all major retailers is now, at best, unclear and very uncertain, writes Terry McCrann.

THE future of what was once Australia’s dominant department store retailer and easily the most profitable among all major retailers — its future, as both a listed company and as an operating business — is now, at best, unclear and very uncertain.

MYER CHIEF EXECUTIVE RICHARD UMBERS FORCED OUT CHAIRMAN GARRY HOUNSELL TO TAKE REINS

BILLIONAIRE SOLOMON LEW FLAGS PLANS TO SPILL RETAILERS BOARD

The future of its chairman is, in contrast, absolutely crystal clear. It is exactly the same as that of its now former CEO.

The chairman of Myer, Garry Hounsell, will be following Richard Umbers out the door.

The only question is when exactly. It will be sooner, quite possibly much sooner, rather than later.

Umbers just failed to make it to three years; there is no way Hounsell is going to make it to one.

In sacking his CEO, the chairman sealed his own fate just as surely as he locked the two of them into a do-or-die embrace back last November. Was it really only three months ago?

He did so with three — for an accountant, particularly — hairy-chested moves, starting while he was still only chairman-elect and then into the first month of his chairmanship.

First, he made an absolute commitment to the so-called “New Myer strategy” — and, by implication the author of that strategy and the person charged with implementing it: the now “departed” CEO Umbers.

The second was to slam the door in the face of the company’s single biggest shareholder, billionaire Solomon Lew.

Myer Chief executive Richard Umbers. Picture: AAP

This was a course of action that would have been “courageous” even if Myer were “killing it” at the cash register. Given its parlous trading state, it was in reality somewhere between “foolhardy” and exiting a plane, at altitude, without a parachute.

The real killer — what showed that Myer had a chairman who didn’t have even the faintest clue about retail reality and how that reality would combine with the said Lew to build a tsunami sweeping towards him, his CEO and executive team and the whole Myer edifice — was the timing.

By getting all hairy-chested in October-November, Hounsell was, as I tried to “advise” him (and Umbers), “betting the bank” on Myer having an extraordinarily profitable Christmas-New Year.

November through January are the three months when Myer makes all or almost all of its profit for the year. When it has to make all its profit.

It ain’t making money in autumn and winter.

That was the short-term — in itself, terminal — cluelessness. The longer term cluelessness, which fed straight back into the short-term, was captured in Hounsell’s reference to the way (corporate) transformations took time; and that Myer was “two years into a five-year transformation”.

Myer chairman Garry Hounsell. Picture: Stuart McEvoy

Oh sure, Lew was going to respond: “well, in that case I’ll back off and give you clear air until around November 2021.” Yes, as they say, that expectation and $4 would buy Hounsell a takeaway coffee.

One might note without comment he certainly put his money where his judgment was — on all these matters: the company’s future, the “skills of the board and (my emphasis) management team (including the CEO?) — in his “recent purchase of 500,000 Myer shares”.

Indeed, one might further note the evidence of his judgment — and retail knowledge — in his decision to join the Myer board only in September to replace Paul McClintock as chairman.

He’s now delivered further evidence of his “judgment” by, in the space of just three months, taking on two more roles — that of CEO and that of finding a CEO. All under the gaze and “support” of Lew.

Trying to “manage” Myer, coming out of a very weak peak trading season, heading into winter, would be a tough enough ask for a seasoned retailer — like, I dunno, let’s pick a name out of a hat, the former (and the most successful) CEO of Myer co

For an accountant to be doing so? Hmm.

But then, coming as it does with seriously challenged asset values that raise interesting questions about its debt covenants ….? Well, maybe ….

As for the search for a new CEO, Hounsell has Buckley and Nunn’s chance of getting a good one and even less of getting the hero super retailer that Myer needs even just to survive.

Hounsell was prepared to walk — blindly? — into the snake pit; I doubt anyone who would be good for Myer is going to follow, four months and a heap of even greater challenges and urgency, later.

Premier Investments chairman Solomon Lew. Picture: AAP

Especially as Hounsell really needs to have got him or her on Wednesday; like, say, three months before Hounsell himself even joined the board.

The question is now posed very directly to Anton Tagliaferro who runs Investors Mutual, Myer’s second biggest shareholder. He cannot possibly continue to support the board.

When Lew calls his extraordinary general meeting, Tagliaferro will be forced to decide: does he vote for the incumbents and certain oblivion, or does he grab for the one chance that Lew offers.

The battle for control of the Myer register and so its boardroom has entered the end game. It is a game the incumbents cannot win.

AND ON THE OTHER HAND …

IN complete contrast is CSL, a company that DID have a hero-CEO in Brian McNamee and is about to get him back as chairman to work with the guy who was handed the toughest job in corporate Australia — replacing the said McNamee.

Everything that Myer is, CSL is the exact opposite. Myer is 20th century, CSL is 21st century.

When CSL went public in the early 1990s, the Myer part of the then Coles Myer was worth perhaps 20, maybe even 40, times that CSL.

Now CSL is worth more than 150 times Myer. That’s, while Myer still has a value.