Myer boss John King to retire next year after long board battle with Solomon Lew

Myer chief executive John King has announced his retirement from the department store owner in the second half of 2024, with his replacement to face a tough economic environment.

Myer chief executive John King has announced his retirement from the department store owner in the second half of 2024, with his replacement to face the fresh challenges of slowing discretionary spending and a tough economic environment.

Multiple retailers have issued profit warnings and confessed to slowing sales in recent weeks, led by winemaker Treasury Wine Estates, food seller Maggie Beer Holdings, jeweller Michael Hill and homewares chain Adairs, signalling the marathon spending run by consumers since the outbreak of Covid-19 could finally be losing puff.

With interest rates still expected to go higher, including a possible hike by the Reserve Bank on Tuesday, and inflation remaining stubbornly high, the new boss of Myer will start the job facing a range of threats.

However, he or she will also inherit the reins of the nation’s largest department store that is in one of its strongest positions – both in terms of profitability and market share – since listing on the ASX in late 2009. Much of that has to do with Mr King’s leadership of the last five years that has seen the retailer rise from the depths of a near $500m loss in 2018 to rising sales and surging profitability out of Covid-19.

Myer has begun its search for the next CEO, with an appointment coming at a delicate time for the retailer not only because of the wider economic landscape but also in the wake of recent boardroom movements.

At last year’s annual meeting, former Myer Grace Bros boss Terry McCartney was appointed to the Myer board, with the veteran retailer a nominee put up by Myer’s largest shareholder Solomon Lew. Mr Lew has been stalking the Myer board since 2017 – a year before Mr King was appointed CEO – and has built his stake in Myer to 25.79 per cent.

Mr King said he had advised the board that he would be retiring from his role as CEO and managing director late next year and would return to the US.

Billionaire retailer Solomon Lew is Myer’s largest shareholder and could play a role in picking the next Myer CEO. Picture: Nicki Connolly/NCA NewsWire

When Mr King was appointed Myer boss he came in at a time when the once grande dame of the department store sector was struggling with flatlining sales and a string of profit warnings that saw its share price plummet as much as 85 per cent.

In 2018 then downtrodden Myer investors were hoping Mr King would bring some of the retail magic he sprinkled over iconic British department store owner House of Fraser as its boss before it was sold to Chinese owners for a bumper price tag of £450m ($845m).

Mr King in his first year at Myer unveiled a loss of $486m as he set about writing off and impairing struggling parts of the business and began investing in his “customer first plan” as well as improving Myer’s online and omni-channel platforms. This came at a time when retail billionaire Mr Lew began his very public campaign against the Myer board which saw the departure of Myer chairman Garry Hounsell, who had appointed Mr King two years previously, as well as other boardroom upheavals.

Despite the interruptions of Covid-19 and a battle with Mr Lew, the 2018 loss has turned into a profit of $49m in 2022.

Myer has delivered a total shareholder return of 136 per cent for the past year and 16.4 per cent per year for the period of Mr King’s five-year tenure. It is also paying a healthy dividend yield of 7.9 per cent.

Wilson Asset Management lead portfolio manager Oscar Oberg said he gave Mr King an “A plus plus” on his CEO report card, having rescued the retailer from “dire straits” in 2018.

“The number one thing he did early on was around the balance sheet. And if you look at it now the balance sheet’s in tremendous shape and that’s probably what really matters to this business given it is in a cyclical space in department stores.

“Obviously there are structural challenges. But as we saw last year and this year there have been the benefits of a lot of the efficiency programmes he has put in place and cost savings, and we can actually see what this business can actually deliver in terms of earnings.

“So he’s done a tremendous job in a tough sector. And you can see what’s happening with David Jones at the moment, which shows you how tough it was. He’s done an awesome job.”

Earlier this year, Mr King impressed investors with Myer’s best interim profit since 2014 and a special dividend.

Throughout his tenure as CEO, Myer has developed a strong omni-channel offer, transitioned into one of Australia’s best performing loyalty programs, right-sized space requirements, reducing overall space by 11.1 per cent since 2018, and delivered a stronger balance sheet with more than $267m in net cash at the first half of 2023.

“When I leave Myer next year, I will do so knowing that the business has a great team of people and a bright future. I am proud of what we have achieved so far with lots more to do, so it will be a busy year ahead,” Mr King said in a statement.

Myer chairman JoAnne Stephenson thanked Mr King for what she described as his “extraordinary contribution” to the company. “In what will be more than six years at the end of his tenure, John will have delivered a remarkable turnaround in the positioning and performance of the business.” she said.

Mr Oberg said any successor to Mr King needed to lean into the challenge of where fresh growth and market share will come from, especially how Myer can lift its revenue given efficiencies and cost savings have been built into the business.

A spokeswoman for Mr Lew’s Premier Investments said, “Premier wishes Mr King all the best for his retirement”.

Mr Lew and Myer director Mr McCartney could play an important role in choosing the next CEO. Interestingly the former boss of Premier and a confidant of Mr Lew, Mark McInnes, is also the former boss of department store David Jones. Mr McInnes is currently a free agent having stepped down from Premier Investments and his non-compete clause ending earlier this year.