Why this Aussie billionaire welcomes Trump’s China tariff threat

It was a big week for retail billionaire Solomon Lew. He has spent decades in the Myer wilderness after being ousted from the Coles Myers board in 2002, but on Thursday, shareholders backed a deal that will make him the department store’s largest shareholder and its de facto king. He also celebrated the inauguration to the US presidency of former business associate Donald Trump.

A jubilant Lew joked about marking the occasion with the manufacture of a cap, on which would be inscribed Make Myer Great Again.

The two men, only a year apart in age, made millions in 2006 from a condominium development in Hawaii. Lew’s group provided the funds and Trump tipped in his naming rights.

Premier investments chairman Solomon Lew.

The Australian billionaire, who has remained a fan of Trump and admits to being impressed by his business savvy and survival instincts, has already contacted the president to congratulate him on the victory.

“I think he is a business person. He is a survivor. They didn’t just throw the book at him – they threw everything at him. And they couldn’t pull him down,” says with more than a hint of admiration for a fellow warrior.

Lew, chairman of Premier Investments, is a tough and self-made businessman less concerned with political correctness than some other Australian business people. He has zero tolerance for his employees working from home.

But it’s Trump’s mooted tariff policy that Lew believes could benefit his business interests in Australia. His businesses, which include Smiggle and Peter Alexander, have long manufactured much of their apparel in China.

He reasons that if Trump proceeds with the imposition of tariffs, a flood of northern hemisphere businesses will desert manufacturing in China. This, he reasons, will in turn open the way for Australian apparel companies to cut a cheaper deal with this Asian manufacturing hub.

“If he [Trump] puts the [additional] tariffs on China [and as a result] it doesn’t have many orders, we can get China to manufacture our stuff more cheaply and that will offset the [adverse] currency movement,” says Lew.

It is more important now than ever for Lew to establish the best manufacturing deals possible.

On Thursday, Lew cemented the merger of his apparel brands including Jay Jays, Dotti, Just Jeans, Portmans and Jacqui E with Myer. A major part of the deal’s rationale is to arbitrage the big margins these brands make with the lower margins that Myer experiences.

Myer will morph into a department store with a major focus on Myer exclusive brands that are sourced and produced in-house, which will now include those Premier apparel brands

Lew has been a major promoter of the appointment of Olivia Wirth as executive chairman of Myer, who has the task of reinventing Myer’s operations, overhauling its distribution centre and introducing brands that she needs to resonate with shoppers.

The department store will still sell what are called concession brands, which essentially operate as small stores within the department store and are managed by the brand’s owners.

One such concession is Country Road, but according to Lew it has not been performing, which suggests there is a risk of its relationship with Myer remaining on existing terms or at all.

Concession brands contribute strongly to Myer’s revenue but less so to profit.

“The customers are prepared to buy the concession brands, but we have to get them to buy other things. We get them in the store to buy cosmetics, for example, but they are not shopping in the rest of the store,” Lew notes.

While Lew will be a director rather than an executive of the enlarged Myer, which will have sales of $4 billion, he won’t be a passive investor.

He has his own personal revenue targets which he won’t share publicly, and they are unlikely to be modest.

Lew was ousted from the board of Coles Myer decades ago and has been on a mission for several years to have his say in the revival of the ailing department store.

He sees destiny in Thursday’s overwhelming vote by shareholders to merge Premier and Myer.

Asked how he would celebrate the successful shareholder vote, he answered he was off to visit Myer stores.

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