Incoming Myer boss Olivia Wirth begins her Myer ‘retail education’ as Solomon Lew plots
Former Qantas loyalty boss Olivia Wirth has begun her education in retail as she prepares for the executive chair role with Myer while major shareholder Solomon Lew prepares his next move.
Incoming Myer executive chairman Olivia Wirth has begun an intense 10-week retail education as she takes the reins at the nation’s largest department store and prepares to replace current CEO John King – and become the custodian of one of billionaire Solomon Lew’s most prized assets.
Mr Lew, whose Premier Investments has a 28.79 per cent stake in Myer and is the $702m retailer’s largest shareholder, will have an opportunity to deliver his initial verdict on this week’s boardroom upheaval at Myer when Premier unveils its first-half results on March 26.
Investors will also be waiting to hear from Mr Lew his own plans for the structural review of his $4.9bn Premier Investments, which could include a merger or takeover of Myer, or injecting some of Premier’s fashion brands into the Myer business.
The Myer moves – which saw the chairman of only five months, Ari Mervis, exit the boardroom and newly appointed director and ex-Qantas loyalty boss Ms Wirth handed the powers of an executive chairman – could only have happened with Mr Lew’s blessing.
Myer director and longtime Lew confidant Gary Weiss was elevated to the position of deputy chairman and lead Myer independent director.
Much has been made of Ms Wirth’s experience running the Qantas Frequent Flyer loyalty scheme, which made $501m in earnings for the 2023 calendar year, and was expected to exceed that in 2024.
Myer now hopes its own scheme, Myer One, can grow into a similarly valuable asset.
Some fund managers have been initially supportive of the elevation of Ms Wirth, despite her having no retail experience.
“I think it’s quite positive, when Olivia was appointed to the Myer board, and Gary Weiss as well, in terms of the quality of the people added to the board over the years – it is very, very high and her experience with Qantas Frequent Flyer is very good for a small business like Myer,” WAM Capital lead portfolio manager Oscar Oberg said. “John (King) has done a tremendous job taking out costs, getting the balance sheet fixed.
“The opportunity for a new CEO is around sales growth and she has got a great pedigree doing that at Frequent Flyer.
“For me it is a good appointment.”
Mr Oberg said there were plenty of examples of companies on the ASX being led by executive chairs, and if Myer hadn’t found the right person in an international search for a CEO then appointing Ms Wirth was the right decision.
He added that given Mr Lew’s Premier Investments now had a larger stake in Myer than it did a number of years ago, the billionaire retailer had a “vested interest in this business to do well” under Ms Wirth.
On Thursday Mr King, who will depart in June, delivered his final financial results for the 124-year old department store owner.
He revealed a 22.4 per cent slide in its interim net profit to $50.5m and a small dip in sales to $1.83bn.
However, the retailer is in a much stronger position than what it was when he was appointed in 2018.
Myer is sitting on $211m in cash and has started to resume paying dividends after an almost five year gap after Mr King set about saving the retailer.
Almost one third of those dividend payments will now flow into the pockets of Mr Lew’s Premier Investments, the fashion and investment vehicle whose retail brands include Portmans, Smiggle, Peter Alexander, Just Jeans and Dotti.
It also has a large equity stake in kitchen appliances maker Breville. Premier Investments will report its first-half results in a fortnight.
Market consensus is for earnings of just over $200m but the fashion and investment company could beat those expectations, according to Morgan Stanley analyst Joseph Michael.
Mr Michael said it was possible that Premier Investments could announce earnings as high as $220m, beating market expectations by 10 per cent.
There may also be an announcement about progress towards a demerger.
“We see potential positive catalysts from a first-half earnings guidance beat and strategic review progress,” Mr Michael said.
We think the risk/reward is attractive, given there appears to be little in the share price for positive outcomes on either catalyst,” he said.
Shares in Premier Investments have risen almost 18 per cent in the last 12 months.
The stock closed 6c higher at $30.62 on Friday while Myer fell 1.5c to 84c.
Myer shares were trading as low as 48c in October.
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