Myer given two months to settle class action
Embattled department store Myer has just over two months to settle a shareholder class action through mediation or face going to trial over allegations that it engaged in misleading conduct and failed to abide by its continuous disclosure obligations.
The Federal Court in Melbourne has ordered that Myer and TPT Patrol, which launched the claim in December 2016, undertake mediation to resolve the multimillion-dollar class action by May 18.
TPT, trustee for the Amies Superannuation Fund, alleges that shareholders were misled by the department store in relation to statements made about its fiscal 15 results.
On 11 September 2014 former Myer CEO Bernie Brookes provided guidance that Myer’s net profit after tax (NPAT) for FY15 would be higher than the $98.5 million booked in FY14.
But on 19 March 2015 Brookes issued a downgrade to the department store’s FY15 profit guidance, saying that NPAT was expected to be between $75 – $80 million, which triggered a slide in its share price.
TPT alleges that Myer breached its continuous disclosure obligations during the period between 11 September 2014 and 19 March 2015 by failing to correct its forecast, and that this also constituted misleading or deceptive conduct.
Shareholders who held a state in Myer between September 11 2014 and March 19 2015 are covered in the class action.
The mediation is not the only legal concern facing Myer in the lead-up to its interim result later this month, when it is expected to incur a significant write-down on the value of its brands.
Premier Investments chairman Solomon Lew is reportedly mulling action of his own as Myer’s largest shareholder with a 10.8 per cent stake that was purchased last year.
Lew has since lost millions on that investment and has previously lambasted Myer for painting a rosy picture of its business in the lead-up to its FY17 full-year result.
Premier will report its own interim result on Friday, and Lew is expected to provide an update on his intention to call an extraordinary general meeting to have the department store’s board, currently headed by executive chairman Gary Hounsell, thrown out.
Myer declined to comment on the class action.
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