Premier Investments chairman Solomon Lew has used an updated copy of the Myer share register to ask its shareholders to “help” install a new majority independent board and “save” the retailer, in a letter sent today.
Following last week’s announcement by the department store retailer that Richard Umbers had agreed to step down as CEO and managing director, Lew said Myer is in “peril” and its “failed board and discredited chairman must be removed.”
Lew referred to the two sales and profit downgrades – sales declined 5 per cent in the Christmas period, and 6.5 per cent during the company’s January clearance – issued by Myer since the retailers AGM in November, where a first strike was delivered against the board.
“These are disastrous numbers and their effect is that the already reduced profits of the company will fall significantly and may even be completely wiped out. We shareholders need to brace ourselves for the end of any dividends from Myer,” he wrote.
The retail veteran then turned his focus to Myer executive chairman Hounsell, “who has no real retail experience, and whose only role as CEO was at the collapsed accounting firm, Arthur Andersen Australia.”
“The man who has now decided to pay himself an additional salary to be executive chairman of this mess, Garry Hounsell, has demonstrated a total lack of judgement in the way he has acquitted himself in the role of chairman, and deserves neither to be appointed nor paid as executive chairman,” he said.
Lew labelled Hounsell’s track record at Myer as “woeful”, citing the former Qantas executive’s backing of a “dead strategy…before he had spent any time with his CEO or properly reviewed the strategy.”
“Last week, business media outlets reported Mr Hounsell as saying he was old-fashioned, hadn’t used the internet to shop, and only bought for himself two-three times a year. He also couldn’t properly explain how Myer’s debt covenants worked. If this out-of-touch incompetence wasn’t causing all Myer shareholders significant value destruction, it would be comical.
“Myer is now in genuine peril and we must act to save the company and what is left of our investments from the failed Myer board. The directors refuse to be accountable to us, their shareholders, and they simply lack the experience needed to guide Myer out of danger.”
Lew said Premier will caucus with other institutional shareholders over coming weeks to compose an entirely new board with a majority of independent directors.
“If the support we receive from the institutional investors is strong enough, we may not even need to hold an EGM to force the resignation of the current directors, but let’s wait and see,” he said.
Lew added that Premier – Myer’s largest shareholder – had “no interest in working with any of the current Myer directors, nor in doing any form of deal with the current Myer chairman or board.”
“It is time for all Myer shareholders to unite to save this great Australian company from the failed board which has destroyed so much of our investments. It is time for Myer’s employees, customers and suppliers to know that there is a strong future for the business under the right leadership.”
Myer has been contacted for comment.
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