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Everything You Need to Know as the Myer, Premier Saga Continues
Chairman of the board, Garry Hounsell, has warned shareholders not to vote against Myer’s board at the upcoming AGM, taking shot at Premier Investments’ “media tricks”.
Myer has struck back at Premier Investments’ Solomon Lew, after leaked financial documents shared with the AFR caused Myer to enter a trading halt late last week.
According to Lew, the company’s confirmed sales drop of 4.8 percent is something “even Father Christmas can’t turn around”. Now, Myer is fighting back, with Hounsell sending a letter to shareholders urging them not to side with Premier Investments at the upcoming AGM.
“Don’t let Premier and their hostile and misleading campaign disrupt and destabilise Myer during this critical trading period,” Hounsell wrote. “Premier has offered zero solutions and refuses to let Myer get on with the job of rebuilding shareholder value,” he continued.
Hounsell then goes on to detail why Premier Investments and the firm’s hostile campaign is a threat to Myer and its future, reiterating the fact that Premier is a direct competitor to the embattled department store.
“The risk of allowing a competitor into the Myer boardroom would be enormously damaging and against the best interests of Myer shareholders. In fact, it would be against our fiduciary duty to shareholders,” he said.
Hounsell also points out that despite Lew’s clear dislike of him and the rest of Myer’s board, Premier Investments still didn’t nominate a director to stand for election at this year’s or last year’s AGM.
“Why doesn’t Premier make shareholders an offer rather than playing damaging media tricks and games to get Myer on the cheap for their own benefit?”
Myer’s Chairman is confident that shareholders will feel more positive about the 100-year-old retailer’s future, after they hear CEO, John King detail his continued turnaround plans for the company.
“Since John King started at Myer, we have had a heightened focus on profitability and we will not chase unprofitable sales in order to hit our top line sales number… You will have the opportunity to hear from our new CEO, John King, and I am confident that when you hear his plan you will agree that he deserves the opportunity to execute his strategy.”
Speaking to the ABC, Myer’s second-largest shareholder, Investors Mutual, which holds a 9.8 percent stake in the company, said it will be supporting the Myer board at the AGM.
“We are supporters of the board, supporters of the strategy and we’re very supportive of John King and Garry Hounsell,” Anton Tagliaferro, the managing director of Investors Mutual said.
According to Tagliaferro, Myer’s worse-than-expected first quarter sales are an indication that the company is focusing on profits over sales, as it moves to remove unprofitable products like furniture and bedding from its stores and focus on higher-margin goods like apparel, beauty and private label goods.
“We’re not going to hand control of the company over to Mr Lew – if Mr Lew wants control of the company then he should pay a premium like everyone else does when they take over a company,” he said.
In the lead up to the AGM, Premier Investments has reportedly been sending Myer shareholders green proxy forms, encouraging investors to vote against the Myer board. Hounsell has called out this dirty tactic and asked that all shareholders follow the proper voting procedure and complete “Myer’s official white proxy form,” which was sent out via Link Market Services on October 25, when shareholders were officially invited to this year’s annual meeting. Hounsell has even gone so far as to tell investors which items they should vote for, and which ones they should vote against.
“The board encourages you to vote “FOR” items 3a, 3b, 4 and 5 and “AGAINST” item 6,” he said in his letter.
According to Hounsell, Lew’s constant letters to shareholders are “grossly misleading and inflammatory” and nothing more than feeble attempts to take control of Myer “under the guise of seeking an independent board”.
Fallout From ASX Halt
On Friday, Myer entered a temporary trading halt in response to an article released by the AFR claiming the company’s sales are an indication the Australian business is at “death’s door”. The article also called into question Myer’s reporting transparency, claiming “tracking below first-half underlying profit of $36 million or less is instantly disclosable”.
In response to this, Myer issued a statement via the ASX saying it’s aware of its reporting responsibilities and is in compliance with them. After emerging from the ASX-enforced trading halt on Monday, shares fell more than 16 percent to a six-month low of 37.5 cents. When the market closed on Monday, the business had recovered slightly but was still trading nine percent lower than it had been before the AFR’s report at 41 cents.
According to a trading update released by Myer on Friday evening, Myer’s sales for the three months ending in October were down 4.8 percent, while same-store sales were down 4.3 percent. In the same period, the company’s main competitor, David Jones, reported a sales increase of 2.9 percent, and same-store sales increase of 2.4 percent for the 20 weeks ending November 11. Online sales during this time also rose by 48.4 percent.
Myer’s AGM will be held on Friday, November 30 at Mural Hall, on the top level of the company’s flagship Melbourne store, with kick off time scheduled for 11 am.
Update: Lew responded to Hounsell’s letter to shareholders on Tuesday, claiming the Chairman’s pre-AGM note is being used to deflect blame.
“In its panicked efforts to avoid accountability, the arrogance of the Myer Board now extends to blaming its shareholders for the mess they have themselves created.
“Myer’s shareholders are not responsible for its plummeting sales, its 90% collapse in market capitalisation, its cancelled dividends, its disappeared profits, its disastrous clearance floors, its market disclosure class actions, its abandonment of its shareholders and other stakeholders in favour of its banks, its inability to address its costs or any of its other myriad problems.”