Myer Facing Uncertain Future, Multi Million Dollar Court Case Looms
Myer is facing an uncertain future as they face having to make a decision in a multimillion dollar class action, at the same time Premier Investment’s Solomon Lew has threatened to take the department store chain to court for misleading shareholders.
The big department store retailer has been given two months by the Federal Court, to settle a multimillion-dollar class action from shareholders who claim they lost money when the department store chain missed profit forecasts in 2015.
Both Myer and TPT Patrol who took action against Myer, have been told to mediate, they have been given until May 18 to settle the case or go to trial.
A three-week hearing has been set down for August.
TPT Patrol who took action in December 2016, is trustee for the Amies Superannuation Fund, they claim shareholders suffered loss and damage because of statements made by Myer regarding its 2014 full-year results.
TPT Patrol has alleged that Myer engaged in misleading or deceptive conduct and failed to abide by its continuous disclosure obligations by providing profit guidance without a reasonable basis and by failing to inform the market about information that had a material impact on the value of its shares.
The class action covers shareholders who bought Myer shares on or after September 11, 2014 and held those shares until March 19, 2015.
The Financial Times reported that on September 11, former Myer chief executive Bernie Brookes said he expected Myer’s profit in 2015 to exceed the $98.5 million earned in 2014. On March 19, Mr Brookes revealed that profits were expected to fall as much as 24 per cent to between $75 million and $80 million.
Myer shares fell 20¢ on the day to $1.28 and are now trading at record lows around 41.5¢ following three profit downgrades over the last 12 months.
A similar scenario unfolded last month when Myer’s then chief executive Richard Umbers warned that first-half net profit would fall as much as 41 per cent to between $37 million and $41 million following an unprecedented 6.5 per cent drop in sales during the January clearance sales.
A week later Mr Umbers was sacked new chairman Garry Hounsell.
Days later One of Myers largest shareholders Solomon Lew’s Premier Investments threatened to take the department store chain to court for misleading shareholders about its prospects last year.
Premier bought a 10.8 per cent stake in Myer last March for $101 million, or $1.15 a share, and has seen the value of its stake fall by more than $60 million.
The losses, worth about 40¢ per Premier share, will cloud Premier’s first-half results, which are due to be released on Friday the Financial Review claims.