Myer’s largest shareholder demands entire board resigns after ‘disastrous’ performance

The department store's largest shareholder has blasted Myer management and demanded resignations over “disastrous” results.

Department store Myer is facing more infighting after its biggest shareholder labelled the retailer’s performance as “disastrous”.

A simmering boardroom brawl has burst into public view once again, with the owner of Just Jeans and Peter Alexander looking to remove all the current Myer directors from their roles.

There are concerns over what it means for Myer’s 60 stores if Premier Investments, chaired by billionaire Solomon Lew, is victorious.

On Tuesday, Premier Investments, which also own Smiggle, Jacqui E and Dotti, confirmed it now owned a 15.77 per cent stake in Myer making it the biggest shareholder. The firm previously had almost 11 per cent of Myer’s stock.

The announcement was accompanied by a scathing take down of Myer’s current management.

“We remain bitterly disappointed by Myer’s performance which continues to be disastrous for Myer’s many shareholders, employees, suppliers and customers,” Mr Lew said.

“In a market where innovative, experienced retailers are benefiting from rapid change, Myer continues to go backwards and its board is missing in action.

“Something has to change, and Premier has put itself in a position to make change happen.”

In a statement to news.com.au on Wednesday, Myer acting chairman JoAnne Stephenson said she was seeking “constructive dialogue” with Premier but the company’s current strategy was “delivering positive results” and the store had “the right team” in place.

Myers’s CBD stores have seen trade plummet due to lockdowns, such as the Bourke St Melbourne store, above. Picture: NCA NewsWire / Andrew Henshaw

Premier at war with Myer

Mr Lew has been at war with the top brass at Myer for some time.

According to the Australian Financial Review, Premier’s investment in Myer has gone from more than $100 million down to $18 million due to the drop in share price.

In September of last year Mr Lew labelled Myer “the world’s most expensive post office” after it struck a deal with internet giant Amazon to let customers pick up goods orders online at its branches.

“It is desperate and sums up just how lost Myer is,” Mr Lew said in a statement at the time.

Shortly after that broadside, and before the annual general meeting, then chair Gary Hounsell left the retailer. He was replaced by acting chair JoAnne Stephenson.

But Mr Lew seems miffed accusing Ms Stephenson of not being in touch with him.

“We are stunned that Premier has not heard from the acting chairman at any stage,” he said.

“Neither the acting chairman nor any of the remaining directors have bothered to pick up the phone to the company’s major shareholder about reconstituting Myer’s emaciated board which is bereft of the retail experience, skills and talent required to turn the business around.”

Mr Lew’s Premier Investments has tried on three previous occasions to turf out the Myer board which the department store has successfully rebuffed.

Premier Investments chair Solomon Lew (left) and CEO Mark McInnes. Mr Lew has blasted Myer’s board. Picture: NCA NewsWire / Daniel Pockett

In September, Myer said it lost $172.4 million in the last financial year. However, in March it recorded a $43 million half year profit.

Sales dropped by a third in its big CBD stores which were hit by lockdowns, a lack of tourists and people working from home. But sales in some suburban stores were actually higher.

Chief executive officer John King said online purchases had risen to 20 per cent of overall sales and costs had been trimmed by reducing the size of some stores in Melbourne, Perth, Canberra and Cairns.

Premier Investments is the company behind Peter Alexander and Just Jeans. NCA NewsWire / Jono Searle

In March, the company said it would close its Knox store in suburban Melbourne by the end of this month. Stores in Hornsby, in Sydney’s north, and Logan, in Brisbane, have also closed since January 2019.

But Premier is said to want more drastic action to trim back the store network.

The Sydney Morning Herald has reported that Mr Lew has previously said Myer needs to axe up to half the remaining stores to reduce costs. That could mean up to 30 current branches are in doubt.

Unlike rival David Jones, which is chiefly focused on major cities, Myer has a substantial number of stores in regional towns and cities such as Launceston, Ballarat, Dubbo and Mackay.

“Premier calls on the failed Myer board to resign immediately,” the statement this week said.

“We will work with other shareholders to reconstitute the Myer board with directors who have expertise across retail, property, logistics and e-commerce so that Myer can reverse its decline.”

Myer: open to dialogue but we have the right team

Myer’s Ms Stephenson said the increased shareholding by Premier was “significant”.

“I have reached out to Mr Lew and look forward to constructive dialogue. We will also be reaching out to other major shareholders.

“The board is open to discussing appropriate board representation of Premier Investments through nomination to the Myer board.

“In considering this, we would need to be satisfied around any issues or potential conflict that Premier’s representation on Myer’s board could create and whether they could be addressed through governance protocols or other means.”

Ms Stephenson added that Myer had a “well-articulated strategy” that was “delivering positive results, despite the ongoing challenges that lockdowns and CBD traffic limitations present”.

“We have the right team and are well positioned to build on this to create value for all shareholders.”

Myer’s store at Knox, Melbourne, which is the chain’s latest closure.

Premier also criticised

However, Premier has itself been under scrutiny recently. In May the company said it would repay $15.6 million of the $70 million in Jobkeeper payments it received when stores closed due to the pandemic.

It said it would hold onto the rest of the cash despite Premier posting an interim profit of $188.2 million, an 88.9 per cent jump on the same period last year.

A number of major shareholders have stood by Myer management and its strategy to up digital sales while trimming back on store space.

Premier will be hoping it can persuade some of those to now come over to it way of thinking.