No kidding Solomon Lew. Look at Richard Umbers track record, and what specifically he did at Australia Post. How do you go from that overpaid sheltered workshop to CEO of Myer anyway?
Myer has lost its way, says key shareholder Solomon Lew
One of the Sydney sites chosen to become a Myer clearance outlet. Pic: AAP
Retail billionaire Solomon Lew has launched a blistering attack on department store Myer and its management team, led by Richard Umbers, as well as its board, saying the retailer is selling old stock that consumers don’t want.
He blasted Myer as now being run by consultants and, following personal visits to Myer stores, said he was horrified at what was being sold in the shops.
In a wideranging spray at Myer, Mr Lew said the clothing for sale in the chain’s newly-launched specialist clearance stores was years old.
“That inventory belongs in the Salvation Army,” Mr Lew said.
He said the once great department store “had lost its way’’.
Mr Lew, a former chairman and director of the old retail conglomerate Coles Myer, said he had never met Mr Umbers but openly questioned if the market had been misled by the board about Myer’s earnings performance between last year’s AGM and a profit warning in July.
Mr Lew, whose Premier Investments is Myer’s biggest shareholder after buying an 10.77 per cent stake in the business earlier this year, also blasted Myer’s turnaround strategy.
Premier Investments chief Solomon Lew. Pic: David Caird.
Mr Lew said the department store chain was sitting on another $35 million of write offs for its struggling Sass & Bide fashion label and was permanently on sale and on mid-season markdown.
Mr Lew said he was originally approached to invest in TopShop when it came to Australia but knew it would always fail in this market, and was puzzled why Myer sank more $20 million into it to buy a stake.
TopShop collapsed in May, destroying Myer’s investment.
“I don’t understand you would buy a share in that, he said, labelling the investment a “debacle”.
And in an ominous warning over his own plans for Myer, Mr Lew reminded journalists at a briefing for the results of his Premier Investments that he doesn’t like to lose money.
“We are not in the ‘lose money business’, Lew doesn’t like to lose money,’’ Mr Lew said as he reflected on the near $30 million Premier Investments has lost so far on its purchase of Myer shares.
He questioned whether the market might have been misled before its profit warning that saw Myer (MYR) shares plummet in July.
“I am bitterly disappointed. If I go back to late 2016, probably around their AGM, they were talking the business up and in fact I think they upgraded their profit at the time,’’ Mr Lew said.
“Come March they were still talking the business up, notwithstanding they had a poor clearance in January. They didn’t at that point in time take their writedown or any impairment in the investment in TopShop — they knew exactly what was going on there — and also in Sass & Bide, which of course has probably got another $35 million to write off and massive trading losses in that business
“Am I disappointed? Yes.”
CEO Richard Umbers is overseeing rhe company’s turnaround strategy. Pic: Aaron Francis
Asked about Myer’s “New Myer” strategy created by Mr Umbers to restore the department store to growth, Mr Lew said it was “strategy on the run”.
“They are continually changing strategies here, you have seen a revolving door of management and unfortunately a lot of good people have left.”
He said the Myer board has lost in excess of $2 billion of shareholder funds.
“The share price has gone from $4.10 to 70 cents — you tell me, is the strategy working?”
He said Myer selling the wrong product at the wrong prices and that it was led by consultants.
“Unfortunately they have lost a lot of their good retailers, and the business now is being run primarily by consultants and the business at this point has too much of what the consumer doesn’t want.
“So when you look at that business today it is on a permanent stocktake sale mid-season markdown, they have opened these new clearance stores, they have got stock that is probably three years old.
“Having viewed quite a lot of stores … I spend weekends visiting a lot of stores and travelling interstate and you would be horrified if what you saw what was really going on out there.’’
Mr Lew said Premier Investments would use its large stake in Myer to demand a “seat at the table” for its future but at this moment had not demanded a board seat.
“At the time when we bought in (to Myer) ... the market was given the impression that the company was on the up and up and that they have seen the worst behind them, which wasn’t the case.
“And so Premier decided they wanted seat at table and whatever happens down the way we are going to have say in what happens … is the reason we made the investment.
“Whatever happens at Myer we’d like a seat at the table ... nothing is going to happen without us.’’
Premier Investments bought into Myer at about $1.15 per share. Myer stock is now around 72 cents.
MYR Price at posting:
71.5¢ Sentiment: None Disclosure: Held
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