Myer boss Richard Umbers steps down

Myer will “turbocharge” plans to revamp the ailing store chain after replacing its CEO because recovery was taking too long.

Myer’s dumped CEO Richard Umbers, right, with chairman Garry Hounsell. Pic: Stuart McEvoy

Myer chairman Garry Hounsell has conceded his reasons for finally dumping embattled chief executive Richard Umbers was because of his own impatience with Myer’s slow pace back to profitability.

But he is adamant the iconic department store is not in any danger of being placed into administration as its losses mount and it stares down the barrel of hundreds of millions of dollars in asset writedowns.

Mr Hounsell was speaking after Myer (MYR) announced Mr Umbers would step down immediately after the department store board became “impatient” for a turnaround in the company’s performance.

Mr Hounsell said he would take over as executive chairman for now and a search for a new CEO would begin immediately.

Mr Umbers’ sudden departure comes after Myer last week issued its third profit warning since launching a $600 million turnaround strategy in late 2015, and amid a collapsing share price.

Mr Hounsell said he would now act with a sense of “urgency” as executive chairman and would be “turbocharging’’ some of the plans formulated by Mr Umbers and his management team, adding Mr Umbers wasn’t moving quickly enough to repair Myer’s sickly financial state.

He also pledged to “lift every rock” at Myer and consider how things can be differently.

However Mr Hounsell still supported Mr Umbers’ “New Myer” strategy, launched nearly three years ago, but which had so far failed to live up to its ambitious profit and sales growth targets.

“This is just a refresh, it’s a relook at everything we are doing with impatience to try and make it more quickly work,’’ Mr Hounsell said.

“This needs a change, we need to really lift every rock and look under it to try and see what we can do differently and it is just that I’m going to have an absolutely different sense of urgency than what Richard might have had because he was executing a strategy that he’d embarked upon three to four years ago with the board.

“This is about my impatience and the board’s impatience to speed up the execution process and increase our returns to shareholders.’’

Richard Umbers had “agreed it was probably the right time to step down”, said chairman Garry Hounsell. Pic: David Geraghty.

Myer is now on the hunt for a new CEO to take on arguably the toughest job in retail, at a time when Myer is also under siege from its biggest shareholder, billionaire Solomon Lew, as its share price crashes.

Mr Hounsell admitted others had asked him who would even want the job.

“Who would want it? Well my wife probably asked me the same question the other night, but look, I don’t mean that in a flippant way, this is an exciting job,’’ Mr Hounsell told The Australian.

“I mean this is an iconic Australian company, it has a brand that goes back to the start of the (last) century, we have 11,000 fantastic workers in the business, and it’s been a great business, is still a great business. There are some troubled waters in terms of retailing globally and I think it’s an exciting job.”

Pushed on why the Myer board had backed Mr Umbers and his $600 million “New Myer” strategy just last week when he handed down its third profit warning since June, but now had decided it was best for him to leave, Mr Hounsell said directors had considered the situation and then acted decisively.

“The board has clearly demonstrated it is prepared to take prompt and decisive action in the interest of all shareholders, my appointment as executive chairman reflects my previously stated desire to drive first-hand the urgency required to deliver shareholder value. This is non-negotiable.

“The board was disappointed (with the profit warning), I know management were disappointed and I certainly know our shareholders were disappointed. As I said the board made a decision or step in this instance, we discussed it with Richard and Richard agreed it was probably the right time to step down.’’

He said the board and management were still reviewing the possible impairments to the carrying value of nearly $1 billion in intangible assets on the Myer balance sheet, which could trigger a breach of its banking covenants — depending on the hit that is taken.

But Myer was not at risk at collapse.

“I don’t believe there is any risk of going into administration at this particular point in time.”

Earlier, in a statement, Mr Hounsell referred repeatedly to his “impatience” with Myer’s progress.

“We are impatient for a turnaround in the company’s performance and the board has determined that it is in the interests of all shareholders for there to be a fresh approach to drive our future direction,” his statement said.

“At the time of my appointment as chairman in November 2017, I said I was impatient and this announcement reflects my desire to drive, first-hand, the urgency required to deliver shareholder value.

“On behalf of the board, I thank Richard for his hard work and commitment during the past three years and wish him well for the future,” Mr Hounsell said.

Only last week Mr Umbers told The Australianhe was “getting stuck in” to the monumental task of resuscitating earning and sales at Myer and that he was there for the long haul.

The former British army officer and Australia Post executive had led the charge on New Myer and constantly talked up its ambitious goals, despite Myer failing to increase its profitability.

Mr Umbers’ sudden departure might open the door for Mr Lew to grab control, with the billionaire businessman running a campaign for the last year to tip out Myer’s board due to the retailer’s poor financial performance.

Mr Lew never directly attacked Mr Umbers for Myer’s dwindling sales and profit, rather savaging the former chairman Paul McClintock and new chairman Garry Hounsell.

Last week Myer issued its third profit warning since June and warned the second half would be as bad as sales dropped and profits sank.

Mr Umbers was also forced to reveal Myer was reassessing the carrying value of its near $1 billion in intangible assets, which could erase all its profits and breach Myer’s banking covenants.

Mr Umbers took over from former Myer boss Bernie Brookes more than three years ago.

There have been a number of shake-ups of Myer’s senior ranks over the last year, with deputy CEO Daniel Bracken ejected from the department store in July — following a profit warning — and CFO Grant Devonport resigning earlier this year.