Myer chief executive John King will step down in the second half of next year to return to Florida, where his family lives, after more than six years in the top job where he led a major turnaround of the department store chain.
Mr King joined Myer in June 2018 when the Australian group was on its knees and quickly established his customer first plan, shrinking floor space and closing stores, and helping transition Myer into a profitable business that has returned to paying regular dividends.
Myer this year reported record first-half sales and its highest interim profit since 2014, including a special dividend.
“The board thanks John for his extraordinary contribution to the company and appreciates that his decision to leave in the second half of 2024 is based on being with his family as their health circumstances demand,” the company said in a statement.
Mr King is on a rolling 12-month contract. In March, when asked by The Australian Financial Review if he planned to step down from his role in the next 12 months, he said “no”.
He will leave the chain at a tricky time for discretionary retail, as consumers come under further pressure with another cash rate increase potentially arriving as soon as this week from the Reserve Bank.
Under Mr King’s tenure, Myer has developed a strong dual offering, growing online sales to $722 million in 2022 from $208 million in 2018, and turned Myer One into one of Australia’s best performing loyalty programs.
Myer is attracting a younger shopper and more customers are joining its loyalty program, which now has about 7 million contactable members, up 11.4 per cent from a year ago. The number of Myer One members who have shopped in the past 12 months is sitting at 4.1 million, up 17.4 per cent year-on-year.
Net profit under Mr King’s direction swung to $65 million in the first half of fiscal 2023, from a loss of $486 million in 2018.
Mr King delivered an improved balance sheet with $267 million in net cash at the first-half balance date. He cut unpopular brands and added the Country Road Group and other new labels.
He has also managed to stay clear of major Myer shareholder Solomon Lew’s fiery statements on the Myer board. Mr Lew via his listed Premier Investments now holds a 25.79 per cent stake in Myer and commands a board seat.
Myer chairwoman JoAnne Stephenson said the board would conduct an international search for his replacement, including local candidates, to ensure a successful transition.
“The board thanks John for 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.”
Mr King said when he leaves Myer in 2024, will do so knowing that the business has a great team 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,” he added. Mr King was unavailable for further comment.
Myer shares bounced 2.2 per cent to 69¢. Shares hit $1.13 – their highest in about six years – in early March, but have been under pressure since.
One source speculated that Mr King wants to go out on top, with the March half likely “as good as it gets” as discretionary retailers start to show signs of slowing. Adairs last week posted its second downgrade since August, while youth retailer Universal Store last month said young consumers were facing serious pressure from rising rents and university fees. Wesfarmers boss Rob Scott warned last week that “the honeymoon is very much over”.
“You have to reinvent yourself, and I think that is what the team have done, is reinvent ourselves as a data- or digital-led retailer,” the Myer boss said earlier this year. Sales had held up in January and February, but the growth rate was slowing.
In the eight weeks after Christmas, Myer’s sales were up 16.1 per cent over the previous corresponding period which had been impacted by COVID-19 store closures.
Major Myer shareholder Wilson Asset Management’s Oscar Oberg said Mr King had “done a tremendous job”.
“I think about what John has been through when he joined in 2018 and it’s a lot. He inherited a business on its knees and done a lot of work around reducing costs and inventory to the extent the business now has limited debt and is now paying dividends.
“Then he has had COVID and the rebound from COVID, and a lack of international tourists impacting the three key CBD stores which is a high proportion of revenue,” he said. “You can see what Myer can now do in a normal environment which we think is close to $100 million in profit. He leaves the business in a very good state.”
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