Will a cashed-up Solomon Lew strike at Myer?
Date
June 28, 2014
Elizabeth Knight
Business columnist
In the money: Solomon Lew. Photo: Josh Robenstone
I wonder whether Myer boss Bernie Brookes had a few restless sleeps this week. He had to contend with the public humiliation in the sacking of one of his star new executive recruits after only one day in the job, having been alerted to the news that the man's CV was a work of fiction. An issue that reflects poorly on Myer's checks and balances and its attention to detail.
But for Brookes, his sleep may be disturbed by the prospect of something potentially far more menacing.
Now that Solomon Lew seems to have found success with his cunning scheme to pocket $210 million by selling his 11.8 per cent stake in Country Road, the next question occupying those in the industry is where to next for the billionaire rag trader.
Lew has never been short of a penny, but at the moment he is seriously cashed up personally and via his listed investment company Premier.
How is this for a theory? Lew takes the cash from the sale of his 10 per cent of David Jones which is about $200 million, adds it to the amount he receives for the Country Road shares and combines it with some cash from Premier and takes a crack at Myer. Combining his personal pot and the Premier pot would require some financial engineering but it could be worked out.
This theory may be fanciful but it has such a poetic symmetry that it's worth airing.
Lew has long had an emotional attachment to Myer - having been variously chairman, executive chairman, vice-chairman and director of Coles Myer for 17 years until 2002. But not all of it was a happy time and in the dying days of his directorship he was in fierce conflict with the majority of the board who ultimately forced him out - with the backing of the Myer family.
Back in March this year when Myer had made an unsolicited (but ultimately unsuccessful) offer to buy David Jones, Lew was quite scathing of Myer - and for that matter David Jones.
He told me that as a former chairman he was very disappointed with Myer's performance - that its shareholders had had a ''pretty tough time'' and that he was not sure where the business was going.
Performance aside, Lew clearly feels plenty of animosity towards the company regardless of the fact that most of the management and board has changed since the days when he was banished.
But Lew is renowned as a patient man with a long memory. His comments implicitly suggest he reckons he could do a superior job. And it's fair to say Premier's retail interests have performed better.
Since the November 2009 re-entry of Myer to disallowed boards, its share price has almost halved.
Retailing has been pretty tough during that period and department stores, in particular, have struggled to boost revenue in the wake of competition from online retailers and the post-GFC birth of a cautious brand of consumer.
And as financial analysts weight up the likelihood of a profit downgrade from Myer for the 2014 financial year, it appears that its recent trading has been particularly challenging.
A report out this week from investment bank Citi has forecast the department store's earnings might come in below the market consensus and that fourth-quarter sales will likely be weak.
Plenty of other retailers have already admitted to slowing post-federal budget sales in May but the report's author, Craig Woolford, says Myer's decision to delay its June clearance by two weeks has been a flop.
If Lew was ever contemplating a cheeky offer for Myer - which is now capitalised at around $1.2 billion - this could present an opportunistic time.
Such a move would be ironic for a couple of reasons.
It was only a month ago when Lew popped onto the David Jones register and the punters were thinking he was about to swoop. They certainly seem to have got that wrong.
The other is that Lew nemesis Woolworths of South Africa - which has bid for David Jones and Country Road and thus filled Lew's saddle bags with cash - would have provided the readies to buy Myer and the two would be arch competitors.
The author doe
Read more: http://www.smh.com.au/business/will...ike-at-myer-20140627-3ayr2.html#ixzz35umxs7RF
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