Lew Calls New Myer Executive Chairman “Discredited”
Following the [forced] departure of Myer CEO Richard Umbers last week, major shareholder Solomon Lew has released a letter describing new Executive Chairman, Gary Hounsell, as “discredited”.
The news comes as Lew amps up his attack on Myer’s board, calling for a ‘clean house’ at an upcoming EGM, with the desire to appoint new directors.
According to The Australian, Lew’s letter blames the retailer’s board for sluggish Christmas sales, and a declining share price since its IPO in 2009 (floating at $4.10, currently ~55 cents).
He forecasts that the retailer’s “first half final profit will be close to zero”.In his letter to Myer shareholders, Lew laments the retailer’s journey:
“It is with no great joy that I am writing to you again in relation to the declining fortunes of the company we jointly own, Myer”
“In the past two months, there have been two more “surprise” sales and profit downgrades issued by the Myer Board. Myer’s sales declined 5 per cent in the Christmas period, and 6.5 per cent during their January clearance”.
Lew refers to newly appointed Executive Director, Gary Hounsell, as “discredited”, whilst citing a lack of retail experience among senior executives.
“To make matters worse, we have now learned that Myer’s CEO, Mr Richard Umbers, has left the business (the latest in a long line of executive departures) and is to be replaced by the discredited chairman, Mr Hounsell, who has no real retail experience, and whose only role as CEO was at the collapsed accounting firm, Arthur AndersenAustralia. In January 2018, Myer replaced its CFO with a new CFO who also has no real retail experience”.
His criticism includes a “lack of judgment” concerning Hounsell’s promotion to Executive Chairman:
“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 judgment in the way he has acquitted himself in the role of chairman, and deserves neither to be appointed nor paid”.
Solomon Lew further criticises the retailer’s $600 million “New Myer” turnaround strategy:
“It is clear from Mr Umbers’ departure that not only the board-endorsed “New Myer” strategy, but also the “New, New Myer” strategy, are dead and buried”
“Any remaining doubt that Myer is in peril should now be removed from the minds of all of shareholders. Myer has a discredited chairman for a CEO, a failed board, a dead strategy, declining sales and profits, an artificially-inflated balance sheet and massive liabilities”.
As a final warning, Lew’s remarks culminate with the forecast that it’s “simply a matter of time until Myer will cease to pay a dividend”.