Lew’s clothing interests may be driving Myer play
Clothing supply contracts, and maybe even a property play, could be behind Solomon Lew’s stoush with Myer.
Retail billionaire Solomon Lew’s private clothing companies and his ASX-listed Premier Investments supply just over $200 million of apparel to department store Myer, and this could be motivating the stoush with the department store.
Mr Lew’s sprawling business interests are the largest non-cosmetics supplier to Myer.
The next flashpoint between Mr Lew and Myer is set to emerge on November 1 when Myer holds a strategy day for analysts and investors that is expected to focus heavily on its “New Myer” turnaround strategy and its online aspirations.
There is also an increasingly popular view within Myer that Mr Lew’s grab for control of the department store could be fuelled by a grand property play, as his Premier group retreats from costly leases with shopping centre landlords to shift to much more cheaper, and potentially cosy, concessions within Myer. There are concerns that a trading update at the strategy day could also confirm disappointing sales since the release of Myer’s full-year results in last month, further infuriating Mr Lew, who became Myer’s biggest shareholder earlier this year and is now agitating for a boardroom shake-up ahead of a possible takeover bid.
If Premier were to take over Myer and absorb it into its own network of fashion brands, it could pave the way for Premier’s high-profile chains such as Smiggle, Peter Alexander, Portmans and Just Jeans to open concession stores across the department store’s national outlets.
This would be particularly beneficial to Premier shareholders, of which Mr Lew is the biggest.
The company last week complained about the excessive rents demanded by shopping centre landlords.
The high rents have seen Premier decide to close Portmans and Just Jeans flagship stores in Melbourne’s Bourke Street mall after being there for 30 years. They are situated across the road from Myer’s flagship Melbourne CBD store.
If Portmans and Just Jeans were to shift into Myer in a concession store it would be at a huge reduction in the rental price and still give the brands a high profile in one of the city’s most important shopping precincts.
Meanwhile, insiders believe Mr Lew’s decision to grab a 10.8 per cent stake in Myer in March through his Premier conglomerate was made partly to protect the interests of his various family and public companies.
Sources close to Myer’s supply arrangements claim a string of companies linked to or controlled by Mr Lew supply clothing, apparel and housewares of just over $200m a year to the department stores, including some of its high-profile private label fashion brands.
The Lew family’s empire of retail supply companies include Voyager Distribution and toy distributor Playcorp — both suppliers to Myer.
Another key branded supplier to Myer is kitchen accessories and appliances company Breville, in which Premier has 27.49 per cent stake in worth just under $400m. Mr Lew’s private companies are also large shareholders in Breville.
Last week Premier turned up the pressure on Myer, announcing it was seeking a copy of Myer’s share register as it considers communicating with other Myer shareholders before its AGM in November.
Premier, which has lost nearly $40m on its investment following a tumble in Myer’s share price this year, could be positioning to oppose the re-election of Myer director and outgoing chairman Paul McClintock and the appointment of new director and deputy chairman Garry Hounsell.
Mr Lew launched a blistering attack on Myer last week, saying its board had overseen the destruction of more than $2 billion in shareholder wealth.
He has accused Myer of losing its way, describing it as a “basket case” run by consultants and selling stock at its new clearance sales that is so old it belongs in a Salvation Army store.
The orchestrated attack could be a prelude to an entrenched battle for control of Myer and potentially a takeover bid by Premier, or spark bids from other suitors such as private equity and overseas department store owners.
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