Myer hits back at Premier as hostilities escalate
In his most comprehensive response to Premier chairman Solomon Lew yet, Hounsell defended the struggling business, which has come under a barrage of criticism from Premier, its largest shareholder.
“Premier Investments continues to be engaged in a hostile and obstructive campaign that appears to be designed to destabilise Myer,” Hounsell said in a letter to Myer shareholders published on Tuesday evening.
“Premier Investments is conflicted because of it position as a major supplier and competitor to Myer,” he said.
The rebuke is a direct response to Lew’s most recent attack on Myer’s board, which was issued in a letter to shareholders last week, and is the latest point of escalation in an ongoing fight for control over the struggling business.
Lew is hoping to oust Myer’s board and appoint three of his own nominees through a possible extraordinary general meeting, having claimed that the future of the department store is in jeopardy under current leaders.
But Myer has taken issue with what it has called “factually inaccurate” remarks in Lew’s recurrent attacks and sought to correct the record on three fronts.
Its first point of call was to address Lew’s claim that Hounsell appointed himself to over-see day-to-day operations of Myer following the departure of former chief Richard Umbers in February.
Lew has been intensely critical of Hounsell and last week took aim at the $83,000 in monthly executive payments outlined for his tenure as interim chief.
Myer said on Tuesday that Hounsell was not “self-appointed” and that he had acted to appoint a new chief executive in John King quickly.
“There was an appropriate board process following the departure of the previous CEO, with an independent committee set up to oversee the transition,” Myer said.
Myer’s second correction related to Lew’s claim last week that Myer had engaged in a program of “extreme discounting” under Hounsell that was hurting profitability.
“Myer has been on an aggressive sales mode for most of this year and it’s just not working,” Lew said last week.
The retailer said on Tuesday that this assertion was false, but it did not provide any further detail.
Reporting Myer’s third quarter sales last week Wednesday, Hounsell warned that fourth quarter profits may be impacted by an inability to move winter stock due to an unseasonably warm start to the cold season.
Myer’s third point of criticism related to Lew’s criticism of Myer board member Julie Ann Morrison, who is also the chairman of its wholly-owned brand sass & bide.
Lew believes Myer’s acquisition of sass & bide was a disaster for Myer that has led to the destruction of around $200 million in shareholder value.
Myer sought to clarify Morrison’s relationship to its acquisition of the brand in 2011 and 2013 and said that the performance of the business had improved since Morrison became chairman of its board last August.
“It is plainly false that Morrison is responsible for the sass & bide acquisition, which occurred in two tranches in February 2011 and September 2013,” Myer said.
Lew warned last week that Myer shareholders should prepare for a fourth profit downgrade in twelve months as the department store finds its feet under King’s leadership.
The department store is expected to report another decline in sales in the fourth quarter and also a full-year loss after incurring a $515 write down in March.