Lew lays down Myer plans
In a letter, the retail veteran also criticised Myer’s chairman-elect Garry Hounsell for “his now-infamous letter” to shareholders which claimed that Premier had not named the two Premier independent directors and one external independent director it put forward join the Myer board to assist in turning the company around.
Lew claimed each nominee was discussed in detail at a meeting with Hounsell, with Premier nominating former Myer managing director Terry McCartney, former UBS MD Tim Antonie and current chief investment officer of Abacus Property Group Steven Sewell to address specific aspects identified by the veteran as critical to Myer’s turnaround.
McCartney is an independent, non-executive director of Premier, previously serving as MD of Myer Grace Bros where he “led year-on-year growth in profitability of Australia’s largest department store, the culmination of which was Myer delivering in FY2000 $3.67 billion in revenue, and $148 million in profit.”
Antonie “was put forward to assist the Myer board on its balance sheet issues, and to address its poor track record of value-destructive acquisitions such as Top Shop and Sass and Bide; while Sewell, formerly CEO of Federation Centres before the $12 billion merger of Federation Centres and Novion to form Vicinity Centres, was nominated because “there is no-one better able to assist the Myer board in dealing with its obvious property and lease liability issues than Mr Sewell.”
“Myer’s long-dated leases in non-performing centres are one of its key issues, and it currently lacks the experience and ability to address this issue at board level,” Lew said.
“Myer is simply waiting for leases to expire, but it needs a property management expert at board level to help it expedite a solution for the benefit of Myer shareholders.”
Premier also said it had named two directors to represent it on the Myer board, equalling a total of 20 per cent of a ten-member board, and named and proposed a further independent director not related to Premier in any way, in response to “the falsehood that Premier has requested 43 per cent of the seats on the Myer board.”
Seven point plan
Premier outlined its plans for Myer’s turnaround, beginning with the appointment of directors with retail experience to “return the business to sales and profit growth” and “address its poor acquisition track record, and stop it from repeating the mistakes of Top Shop and Sass and Bide, where clearly there was deficient due diligence and strategic thinking involved.”
The plan includes a focus on returning service levels ‘after Myer stripped back the hours of experienced staff on the shop floor’ and the closure of “the disastrous clearance floors,” dubbed “a blight on the Myer name.”
“Myer cannot get out of its troubles by becoming a second-hand store. The stock in the clearance floors should be written off as some of it is approximately 3 years old.”
Lew also hit out at “the loss of talented retail executives” and said to “get rid of the consultants.”
“Consultants do not know retail, they know consulting. Myer needs retailers who know the business from the shop floor up, as well as experienced, solutions-focussed businesspeople who can tackle their key issues.”
“Hounsell might sneer at Premier’s so-called “rag trading mentality”, but the object of retail is to trade, not to stockpile old merchandise that no-one wants for years and then dump it on the market via “clearance floors”.
“Experienced retailers know what customers want because they listen to customers and deliver on their needs. They then know how to source that product from the leading manufacturers and how to range it profitably. If that’s “rag trading”, then so be it.”
Premier added the closure of non-performing locations should be accelerated but said “Myer simply lacks the nous at board level to find solutions with its landlords.”
Myer said the statements from Premier Investments “demonstrates their agenda of disrupting Myer at a critical time of year when our focus is on serving our customers through the busy trading period, and delivering on our new Myer strategy.”
“Nothing in today’s statement changes the fact that Premier Investments is one of Myer’s biggest competitors and suppliers. No one would expect Woolies to invite Coles onto its board,” said a spokesperson for the department store retailer.
“Myer directors urge shareholders to vote for all resolutions to ensure an independent, conflict free, Myer.”
Myer’s AGM will be held on November 24.
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