Myer chief executive Richard Umbers personally contacted billionaire Solomon Lew in June to arrange a meeting where Mr Lew could share his critique of the department store’s poor performance and explore co-operative arrangements, at a time Myer directors were rattled by the conflicts of interest Mr Lew faced as the biggest shareholder and apparel supplier.
Since April Myer directors had discussed at length the myriad of possible conflicts of interests that could arise if Mr Lew or his associates were given a seat on the board, and any cosying-up to the billionaire who, through his publicly listed companies and family businesses, sells more than $200 million worth of goods through Myer.
Despite these corporate governance concerns there was still an attempt to embrace Mr Lew and pursue a possible collaboration. In an email sent by Mr Umbers to Mr Lew on June 16, and obtained by The Australian, Mr Umbers also refers to a range of photos that Mr Lew took while visiting Myer stores. The photos exposed and underlined Mr Lew’s growing concerns about the shoddy state of some Myer stores, and his view they were selling clothing consumers didn’t want and that was “so old it belonged in the Salvation Army shops”.
The pictures were sent to Myer chairman Paul McClintock, The Australian can reveal, and then forwarded to Mr Umbers, who then emailed the Premier Investments chairman and Myer’s largest shareholder to arrange a meeting.
“Dear Sol,” Mr Umbers began his email on the afternoon of June 16, “Paul (McClintock) has passed on to me your emails and photographs from your recent visits to Myer stores. I will give you a call on Monday morning to discuss your thoughts and concerns, and also to offer to meet in person.”
Last week Mr Lew slammed the state of Myer stores and stock, revealing he spends his weekends walking the floors and was shocked by what he saw.
“Having viewed quite a lot of stores ... I spend weekends visiting a lot of stores and travelling interstate and you would be horrified if you saw what was really going on out there,’’ Mr Lew said on September 25, as Premier released its own full-year results.
“That inventory belongs in the Salvation Army,” Mr Lew said.
In his June email Mr Umbers raised the idea of the pair exploring ideas and opportunities with Premier or Mr Lew’s private company Century Plaza. “It would be good also to discuss whether there are any opportunities that Myer might explore with Premier or Century Plaza as well.’’ Mr Lew holds a 42.43 per cent stake in Premier through Century Plaza.
To date Mr Lew has not met with Mr Umbers. In a statement to The Australian, Mr Umbers said he was disappointed the personal email was made public, and that it was natural for Myer to be in contact with its key supplier and major shareholder.
“I am disappointed that private correspondence between myself and Mr Lew would find its way into the hands of media. It should be considered unremarkable that both myself and the chairman have reached out to Mr Lew, as he is both a major shareholder and a supplier.”
The extension of an olive branch to Mr Lew, and courteous offer of co-operation by Mr Umbers, did come at a time when Myer directors were growing increasingly concerned about Mr Lew’s attempts to use his 10.8 per cent stake in the department store to gain control over the retailer.
As The Australian revealed on Tuesday, at board meetings after Premier had seized $100m worth of Myer shares in March to become its largest shareholder, Myer directors expressed their misgivings over Mr Lew’s possible conflicts of interest as Myer’s biggest non-cosmetics supplier and as a rival retailer through his Premier fashion conglomerate and family-owned apparel brands.
A number of Myer directors voiced their concerns about the size and scope of dealings Mr Lew’s sprawling business empire had with Myer, and there was some discomfort among directors that if Mr Lew used his large shareholding in the department store to force his way on to the board, or elect one of his associates, it would immediately plunge the board into a corporate governance crisis.
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