By Carrie LaFrenz
Myer executive chairwoman Olivia Wirth is facing increasingly restless shareholders who are demanding details about the retailer’s new strategy, including an explanation of how a merger with Solomon Lew’s ageing but profitable apparel brands will work.
Ms Wirth, who was appointed in March, has moved quickly to instigate a review of the mid-market department store’s operations. She has proposed buying a portfolio of brands – Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti – owned by billionaire businessman Solomon Lew’s Premier Investments, Myer’s largest shareholder.
But the company has scrapped plans to outline its new strategy to investors in October, and now expects to do so by the end of the year. That, and a disappointing trading update for the start of the new financial year, pushed shares down as much as 10 per cent on Friday. They rose in late trade to close 0.6 per cent lower at 87¢.
Myer, which operates 56 stores and online, revealed a slightly softer update in the first seven weeks of the year with sales barely growing. Earnings fell 17 per cent and net profit slumped 26 per cent in the last financial year.
In August, other retailers such as JB Hi-Fi noted sales had picked up in the opening weeks of the new financial year, while furniture company Temple & Webster and youth apparel retailer Universal Store also reported growth in that period.
The company was preparing to sell those labels – which have outlets outside the department stores and have fallen out of favour with shoppers – until Ms Wirth’s appointment. They accounted for half of the collapse in Myer’s profits last year.
“I’m disappointed around David Lawrence, Marcs and Sass & Bide brands,” Mr Oberg said. “How are they going to get that $9 million in lost profits back? Why is it part of the strategy? I would have thought all the focus would be on Premier’s apparel brands.”
Myer plans to shut 10 Sass & Bide boutiques, while four will remain open. Ms Wirth will also open eight Sass & Bide stores at Myer, and will expand Marcs and David Lawrence’s presence inside the department store.
She said Myer needed to be “famous for our brands”. Those private label brands include Basque, a range of affordable women’s basics, and have far higher profit margins than those the company does not own.
While the accounts presented by Ms Wirth were her first as Myer’s executive chairwoman, they are for a year that was largely overseen by her predecessor, John King, who was chief executive for six years. Ms Wirth formally started in June.
Mr King took over in 2018, when Myer was lumbering under long-term leases, depressed sales and a poor product range. He arrested the deep sales decline, closed stores, grew the online business and returned the business to profitability in 2022. Myer also frequently clashed with Mr Lew, who accused the company of poor performance.
Get ready for peak trading
Largely disclosed in August, Myer’s accounts show a 2.9 per cent fall in sales to $3.3 billion in the 12 months to July 27. Online purchases now make up nearly 22 per cent of total sales. Profit fell from $71.1 million in the year before to $52.6 million, pushing dividends lower with a final payout of 0.5¢.
“The opportunity for Myer is to make sure that we provide that right product, the right value, and that we get ready for peak trading in Q2,” Ms Wirth said on Friday.
Premier will release its full-year results next week, which will provide more details about the profitability of the brands Myer proposes to buy. Investment bank brokers have estimated the merger could result in $55 million in annual savings, and give the combined company a market capitalisation of more than $1 billion.
