After reporting a staggering 3.2 percent loss in sales in its recent FY18 results statement, Myer’s shares have risen by a reported 37 percent despite claims by the company’s biggest critic Solomon Lew, that the business is a “disgrace”.
On Wednesday, Myer released its results for the 2018 financial year revealing a 3.2 percent drop in sales, with the company acknowledging the poor numbers, which Chairman Gary Hounsell described as “disappointing”.
However, it wasn’t all bad news for the embattled multichannel retailer, as the company’s Chief Executive, John King, also discussed his new ‘customer first’ strategy as well as details surrounding the businesses new banking deals and relaxed lending covenants. Shareholders seem to have responded positively to these announcements, with the company’s stock surging by 15.5 cents on Thursday in a seven month high.
Lew, however, is less than impressed with the department store’s management, creating his own report card on the company’s FY18 results, referring to the company’s board as an “absolute disgrace”.
According to Lew, whose own business Premier Investments owns a 10.8 percent stake in Myer, the businesses shareholders have “suffered” as a result of Myer’s incompetent board.
“The board of Myer is an absolute disgrace,” he said in a release, “And while the board of Myer, led by Garry Hounsell, has bumbled along and taken their fee cheques, it is Myer’s shareholders who have suffered.”
Lew also believes the business is now owned by the banks, with the less-than-impressed shareholder claiming “the banks are now in full control of Myer – it will be run from now on by its bankers.”
With a reported $486 million loss over the last year, and further difficulties predicted for the coming years as the company continues to suffer from slow sales, restructuring and store exit costs and asset impairments, Lew believes Myer’s goodwill with its partners is at risk, with losses set to rise as a result of reported increases in interest costs.
As part of Myer’s refinancing efforts, the iconic Australian retailer has lowered its debts by a reported $6 million to $107 million. The company’s previously unsecured loans are now secured, with bankers agreeing to extend debt repayments out from August 2019 to February 2021. Myer claims the security on its refinancing efforts with its bankers is normal, but as far as Lew is concerned, it’s yet another sign “Myer needs directors with retail experience on its board”.