Retail veteran Solomon Lew says Myer’s latest sales figures show the department store’s strategy is reaping only “weeds” and that its incoming chairman is unelectable.
Under pressure from Mr Lew, whose Premier Investments is Myer’s largest shareholder and who had called on the company to back up claims its turnaround strategy was showing “green shoots”, Myer revealed sales in the 13 weeks to October 28 dropped to $699 million, down 2.8 per cent from the same period last year.
Solomon Lew is agitating for change of the Myer management. Photo: Josh Robenstone
“I only see weeds, no green shoots,” Mr Lew said after the figures were released.
Premier, which owns 10.8 per cent of Myer’s shares, has called on other shareholders to vote against the election of Myer’s board nominees at its AGM later this month and demanded the appointment of two of its own representatives.
“Today’s announcements by Myer are final proof that Garry Hounsell is unelectable as chairman of Myer,” Premier said in a statement.
“Mr Hounsell has promised to deliver more of the same failed ‘New Myer’ strategy, and he will now reward the Myer management team for taking the company backwards.”
“If [shareholders] vote for Mr Hounsell, they are voting for falling sales and profits, which means a falling share price. If they vote against Mr Hounsell, they are voting for change and improvement.”
Premier said that Myer’s sales had dropped “alarmingly” even while troubled retailer Big W yesterday revealed its sales had grown in the first quarter.
Comparable sales – which strips out the impact of opening or closing stores – were down 2.1 per cent, which Myer’s chief executive Richard Umbers said reflected tough competition and soft consumer sentiment.
Taking into account those tougher conditions and the looming arrival of online giant Amazon, Mr Umbers said Myer would be accelerating the rollout of food outlets in stores, opening barber shops in Sydney and Melbourne and introducing more hair and beauty services.
It will also trial opening a children’s play centre at its Eastland store in Ringwood, Victoria, early next year, all of which would encourage shoppers to spend more time in stores.
“Dwell time is probably one of the most important aspects to running a business that generates traffic,” Mr Umbers said. “The great thing about something like a kids’ playcentre is it attracts families.”
Myer will also open a new online store called The Myer Marketplace, which would run alongside its existing website as a platform for third parties, including Myer concession stores, to sell home and lifestyle products.
“We can’t out-Amazon Amazon”, Mr Umbers said, adding that its Marketplace would be unique in offering a tightly curated range of products, would link in with shoppers’ Myer One accounts and allow them to return items in Myer Stores.
Myer said it had identified 19 stores which it will consider closing if it can’t improve their returns by achieving better sales or negotiating cheaper rent. It would not say where those stores were.
Premier Investments bought 10.8 per cent of Myer’s shares in March for $100 million – a stake that has since fallen in value by more than $30 million as the stock plunged amid poor trading.
Myer’s shares closed 4.6 per cent lower to 73¢. The stock has fallen almost 7 per cent this week and tumbled 47 per cent since January.