"Myer is in peril" declares Solomon Lew in heated letter to shareholders
Written on the 18 May 2018 by Paris Faint
Solomon Lew has slammed Myer (ASX: MYR) and its executives in an acrimonious letter to shareholders, warning that the company is on the cusp of a devastating net loss at the full year.
As chair of Premier Investments, Myer's biggest shareholder, Lew made his outrage clear at executive chairman Garry Hounsell's announcement earlier in the week that the company's sales for the financial year were down 3.4 per cent.
Lew says the sales decline comes despite the extreme discounting program the Myer has implemented over the past quarter.
"Myer has been selling dollar notes for fifty cents each, and they still can't improve their sales," he says.
"We shareholders will pay the price for this incompetence we have already lost our dividends, and we will also soon be paying higher interest charges and increased bank fees on Myer's debt."
On Wednesday Myer revealed that its total year sales dropped by 3.4 per cent to $2.35 billion, a result which Hounsell partly put down to warmer weather during May.
"As reported by a number of other retailers, the unseasonably warm start to winter has impacted sales, particularly in winter apparel, shoes and accessories, which may impact profit in the fourth quarter," he said.
Lew shot back at the explanation, arguing that Myer would be better off if "Mr Hounsell knew retail as well as he knows excuses".
"Mr Hounsell is also trying to soften us up for another bad sales and net loss announcement ahead, saying the weather has been too warm during May. Too warm? He must not have been outside for weeks," said Lew.
Hounsell joined Myer in September 2017 and according to reports backed former CEO Richard Umbers' new strategy for the company.
Lew has declared that Hounsell allowed the strategy to morph into a system which would reward management for "taking the company backwards".
Laying the boot further into Hounsell and the rest of the Myer board, Lew says their lack of expertise in management will be "demonstrated in embarrassing detail" when Myer reveals its full year results later this year.
"Myer is in peril it has declining sales, despite massive discounting. It will report a very substantial net loss for the financial year. It is at risk of breaching its debt covenants," said Lew.
"At best, this means increased interest and higher charges from its banks. At worst it puts the company's entire future at risk.
"These issues are all the fault of the current Myer board. We must hold them to account for their failures."Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
Author: Paris Faint