Myer CEO pushed out by board

MyerBourkestreetMyer’s chief executive Richard Umbers has been forced to resign but the board is sticking with his turnaround strategy.

The troubled department store’s chairman Garry Hounsell has been appointed executive chairman while a search for a new CEO takes place.

Investors appeared to welcome Umbers’ exit with Myer’s shares up 5.6 per cent at 56.5 cents by 1306 AEDT on Wednesday.

Hounsell said the board had asked Umbers, who was parachuted into the job three years ago, to step down after the company on Friday flagged a significant fall in first-half profit and warned of an impairment.

“We had discussions with Richard immediately after the half-year announcement and it was a mutual agreement that he should step down,” Umbers said.

He said Umbers’ resignation was in shareholders’ best interest, but he believed the turnaround strategy – dubbed New Myer and which includes a clearance floor – was the right strategy.

“The strategy is not under review…I think it is all about execution of strategy and that is what I will be looking at very clearly,” Hounsell said.

He said the group’s financial situation needed an urgent turnaround.

But, he said, there would be people willing to take on the challenge despite fierce opposition to the New Myer strategy from major shareholder Solomon Lew.

“I think there will be people out there who will be incredibly energised by this opportunity.

“I think we will get some very good candidates.”

Hounsell declined to say whether Umbers’ resignation had been discussed with Lew or whether he thought it would help ease tensions between the company and its key stakeholder.

Lew, whose company Premier Investments took a 10.8 per cent stake in Myer in March 2017, has been highly critical of the department chain’s performance and on Friday called for fellow shareholders to “save the company” with a board spill.

His call came after Myer announced its first-half net profit would likely be between $37 million and $41 million, down from $62.8 million for the same period last year.

But that forecast excludes impairments, the size of which is still being calculated.

On Wednesday, Hounsell said he did not believe the impairment would put Myer faced at risk of going into administration.

Myer in the past six months has announced stores closures, shed jobs and written down various investments as Umbers’ turnaround strategy failed to gain traction against a backdrop of sluggish consumer activity and increased competition.

The company’s 2017 full-year profit was down 80.3 per cent to $11.9 million, partly due to $45.6 million in writedowns against its investments in TopShop and Sass & Bide.

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Comments

2 comments

  1. Darrell Wisbey posted on February 15, 2018

    UNBELIEVABLE ..... it would be interesting to publish the year in which Myer last posted an acceptable bottom line profit and equally so would be to know the milestone indicators flagged to confirm the "turnaround" strategy is proving successful. The new strategy includes a "clearance floor" and that prompts the questions: 1. Is that suggested as the saving move to turn Myer around? 2. What is the difference between the "clearance" floor referenced in this strategy and the "bargain basement" of decades past? 3. Does the need for a "clearance floor" suggest that the control over merchandise is so poor that this avenue becomes the excuse to dispose of bad product ranges and/or undisciplined quantification and sell through management? I shopped in Myer Geelong recently and was appalled at the limited range of men's shoes and then when I wanted to make a purchase at 2pm on a Thursday there was not a single service person in sight. There was a "manager" who slowed sufficiently as he passed to say he would send assistance and he did this three times before a service person finally arrived. There were however 5 other guests in the same location all holding shoes and wanting service. Three put their selection back on the shelves and departed, one was eventually able to get service but was told the size required was not in stock, one did make a purchase. As for me I had sufficient time to change my mind and decided I would spend my money elsewhere. You want a strategy to fix Myer .... get the basic retail disciplines right .. here is a simple strategy: offer the right product, at the right price, in the right quantity in the right stores at the right time. Hmmm where I have I heard that before! reply

  2. Peter posted on February 15, 2018

    Darrell, you are so right on everything you said. Umbers had no idea and to be honest Myer hasnt had any idea for the last 8 years. C'mon shareholders surely you cant believe the rhetoric that has been thrown around by Myer. Put Solomon Lew in their before Myer runs totally out of money Solomon has a vested interest as a supplier and as a major shareholder. reply

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