By Emma Koehn
Myer’s investors would be forgiven for feeling an intense rush of déjà vu this month.
Among the steady flow of company earnings documents released last week, the department store issued a short statement to the ASX on Thursday night, confirming that Solomon Lew’s Premier Investments Group had signalled an intent to nominate former Myer Grace Bros. boss Terrence McCartney to the Myer board at its annual general meeting,
Myer previewed its strongest numbers since 2017 last month. Credit: Rhett Wyman
Myer has not even set a date for its AGM yet, and both the company and the Lew camp have declined to comment further on the move.
But news that McCartney was being put up as a candidate for the board is a bit of history repeating itself – he was also among the names Lew championed 2017 in his attempt to inject more retail experience into Myer.
Quite a few years have passed since Lew started his pursuit of Myer, and plenty has changed, including the intrusion of a global pandemic on the trading landscape.
The department store is also in a very different place in 2022. Not only did a trading update released last month show that it is profitable, its balance sheet is the strongest it has been in years and sales momentum has been maintained even in a time of shaky consumer confidence.
Against this backdrop, shoppers and investors may be asking: if the turnaround strategy is working, what more does Lew think he can add right now?
When asked this question, retail analysts and investors point to the strengths of Lew’s company Premier that could be applied to the Myer business.
These include Premier’s power as a negotiator, particularly when it comes to retail leases, and the strength of its brands.
While Myer has changed its strategy around fashion brands many times over the years, Premier’s stable of companies, including Peter Alexander and Smiggle, all have clear identities and highly experienced retail executives at the helm.
Retail billionaire Solomon Lew.Credit: Pat Scala
Premier has also been slightly ahead of Myer when it comes to online sales, with some stock watchers suggesting the department store could learn a thing or two from Premier’s approach to online delivery.
In 2021, Premier’s online sales contributed 20.8 per cent to the company’s global sales, while Myer’s online sales were 20.3 per cent. It’s not clear where these numbers will end up for the 2022 financial year though - Premier’s half-year result in February had online making up 25.4 per cent of total sales, compared to Myer’s 27.9 per cent, while Myer’s full-year trading update showed online sales at 24 per cent of total transactions for the year.
Overall though, few are convinced that any big strategic changes are looming because of Lew’s interest. Instead, they are viewing this fresh push for a board representative as a signal that the retail billionaire thinks Myer has good bones.
Trading at 49 cents on Monday, Myer’s stock has declined 32 per cent over the past year. But investors believe the brand is capable of a big rebound off the back of its current turnaround strategy.
Wilson Asset Management’s Oscar Oberg said his team doesn’t think Myer needs any serious change in strategy right now, noting his firm was thrilled with the progress chief executive John King and his team have made to date.
He said Lew’s creeping investment in the company suggests he agrees that there are growth opportunities.
“Given that the Premier’s shareholding has been creeping, it shows that Sol and the team see value — and we think Myer is grossly undervalued by the market,” he said.
Just last year, a large group of Myer shareholders was expressing concerns to this masthead about Lew’s attempts to rejig the company’s board.
On Monday, Myer shareholder and former founder of Swisse Organics Michael Saba said he believed Lew’s renewed interest in Myer this year shows his awareness of its growth trajectory.
Saba said he doesn’t think the company needs any new strategic focus, given the cultural turnaround John King has made.
“I just want them to continue on this amazing path,” he said. “If anything, we should start to hear some commendation for the team.”
It could be months before investors get to see how this next chapter of the Myer/Lew saga plays out, but in the meantime, the share price is bouncing: the stock is up 19.5 per cent over the past six months, while the ASX 200 has lost 1.6 per cent.
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clarification
This article has been updated to include online sales figures for Myer and Premier in 2021 and 2022 so far.