Myer’s falling sales and a downward spiral in foot traffic as shoppers increasingly choose to buy online sees it in a hazardous state. Shareholder Solomon Lew is now on a mission to overthrow Myer’s board, starting with chairman Gary Hounsell.
While the Myer board said Richard Umbers’ recent step down as CEO was made due to a “turnaround in the company’s performance”, last week stating: “the board has determined that it is in the interests of all shareholders for there to be a fresh approach to drive our future direction” – it’s future still hangs in the unknown and investors are nervous.
Rightly so, seeing that Myer’s new chairman, Garry Hounsell, who last week replaced Umbers as interim chief executive while it seeks a new head, has zero retail experience. “I’m incredibly old fashioned,” he said openly at a media conference last week, admitting he only shopped two or three times a year.
“So what it is when I shop, is completely irrelevant to the public. It’s just the way that I shop and that’s the way I’ve done it for 50 years – it’s nothing to do with online retailing or anything else.”
While Umbers five-year “New Myer” turnaround strategy unveiled in 2015 failed to deliver, Hounsell still doesn’t have a new strategy in place and it’s unknown how long it will take the department chain to find a suitable new CEO replacement.
It comes as no surprise then that in his second effort to discredit Hounsell in under a week, retail veteran Solomon Lew who has been highly critical of Myer’s performance dialled up his discontent for Hounsell at the helm, calling him “incompetent” in a recent letter to shareholders.
It is understood that Lew has now received a copy of Myer’s updated share register and is actively working on overthrowing the Myer board, including Hounsell.
In his letter, he reminded shareholders of Hounsell backing Umbers’ $600 million turnaround strategy, now in tatters, despite not spending enough time to review it.
“You might remember Mr Hounsell talking about the ‘green shoots’ he saw developing at Myer late last year, while its sales and profits were sliding… You might remember Mr Hounsell saying Mr Umbers had his full support as CEO. How can shareholders have any faith in him?” Lew wrote in his letter.
Lew also brought light to Hounsell’s lack of retail experience saying his only role as CEO was at collapsed accounting firm, Arthur Andersen Australia,” highlighting that while admitting he’s an old-fashioned shopper, Hounsell still hasn’t shopped online or explained Myer’s debt covenants properly.
“The man who has now decided to pay himself an additional salary to be executive chairman of this mess, Garry Hounsell, has demonstrated a total lack of judgement in the way he has acquitted himself in the role of chairman, and deserves neither to be appointed nor paid as executive chairman.”
“It is now clear to me that the entire Myer board must be cleaned out if the company is to have any chance of surviving,” Lew wrote in his letter.