Myer Rules Out Voluntary Administration
Heralded Australia’s largest department store, Myer, has ruled out a voluntary administration, following struggling sales, and its recent $476 million half-year loss – the biggest in company history.
Myer is actively hunting for a new CEO, following the departure of Richard Umbers in February. Umbers joined the retailer in 2015, and was involved in the $600 million “New Myer” strategy, which pledged to turnaround results in five years.
As previously reported, commentators speculate Umbers was forced out by Myer Executive Chairman, Gary Hounsell.
Speaking to The Australian Financial Review, Myer affirms a voluntary administration is not under consideration. Several insolvency experts claim a VA would cause further issues for the struggling retailer.
Myer reportedly has $2.7 billion in leases looming, and $19.9 million in net debt [gearing ~3%].
Following a 24% drop in its earnings during the January half, the retailer is edging closer to a breach in fixed charges cover covenants within banking agreements.
Some commentators speculated Myer may accept a voluntary administration (VA), and pursue a similar path to the Oroton Group. Oroton was placed into VA to void lease agreements, as it renegotiated rents with landlords.
Despite its struggling financials, Gary Hounsell affirms Myer is actively looking for a new CEO:
“As Executive Chairman, it is my role to ensure the business delivers on these customer centric measures and profitability, while the process of recruiting a new CEO takes place”.
Hounsell claims the retailer is in active discussions with Myer’s landlords, and the retailer’s management is focused on several procurement benefits.
Despite the flailing success of its retail stores, Myer’s online space posted a 48.9% year-on-year increase, and continues to be a “standout result”.
The retailer’s brand value has also been significantly hit, following a whopping $524.5 million wipe-out of its goodwill.
Total sales for the half-year slipped 3.6%, and revenue notched $1.71 billion. A net loss before impairments of $40.1 million came in close to the guidance provided in February.
Back in February, Myer issued a profit downgrade, whilst affirming performance had worsened since Christmas.