Fails to respond to competition.
Myer has recorded a statutory net loss after tax of $476.2 million for the 26 weeks to 27 January, 2018, which includes a non-cash impairment charge of $500.2 million and other asset impairments of $6.4 million. Total sales for the department store were down 3.6% or 3% on a comparable store basis.
Myer executive chairman, Garry Hounsell (pictured) highlighted Myer’s online performance as the standout element of the results with online sales growth of 48.9% to $105.2 million, following a 48.4% increase in 1H2017.
“Myer now has one of the largest and fastest growing online businesses in Australia,” he said. The online business now represents Myer’s third largest store and has “encouraging penetration” across a number of categories.
However, he noted the overall half-year results as “unsatisfactory”, reflecting a number of execution issues including the failure to respond appropriately to the heightened competitive environment prior to Christmas.
Premier Investments urges Myer to replace board
Following the release of the results, Premier Investments issued a statement to say that the Myer Board should be removed and replaced as soon as possible if the company has any hope of surviving.
The statement highlighted a number of points for shareholders to take into consideration:
- The $538.2 million write-off taken by the Board and its relationship to Myer’s debt covenant triggers. At best it’s curious. It’s certainly unsustainable.
- The abandonment of the new performance targets for management that were only re-set at Myer’s Strategy Day in November 2017. If the Board is not holding management to account, what are they doing? They have clearly surrendered their responsibility to shareholders.
- The end of dividends, as Premier predicted. They will not return under this Board. Any shareholder who wants to ever be paid a Myer dividend again must help us remove this Board.
The statement also noted that Garry Hounsell, “who is not qualified for the role”, is paying himself $1 million per annum to be executive chairman “amid the carnage he and the Board are creating for shareholders”.