If department stores are dying, Solly Lew missed the memo.
This week his investment vehicle, Premier Investments, struck a deal that will personally deliver him close to a third of department store Myer and, if it gets across the line, will pave the way for him to return to the Myer boardroom.
It’s been a long time coming. For the past seven years, Lew has been stalking Myer, gradually buying up stock through Premier.
It’s hardly been financially rewarding.
Myer’s financial performance has been consistently poor, regularly notching up losses per share since, and then raising concerns about its long-term viability.
That has been mirrored in the stock price, a performance that has reflected the sad and sorry tale of Myer’s most recent incarnation, dropping to a mere 10c a share shortly after the COVID pandemic gripped the globe and tipped share markets into a deep freeze.
A company with a rich history stretching back to federation, it joined forces with Coles in the 1980s, before being spun off and controversially sold into private equity in 2006.
A history of disappointment
The company’s float on the Australian Securities Exchange on Melbourne Cup Day 2009 was a disaster.
Sold to punters amid a huge amount of hoopla at $4.10, it never achieved its listing price, finishing its debut at $3.88 and has headed south ever since.
“The company’s been through the private equity wringer,” explains one long-time business associate.
“Everything that could have been sold was, and since then there’s been no significant investment in the business.”
Under the proposed deal with Premier, Myer will buy Just Jeans and Jay Jays in exchange for Myer shares which then will be distributed to Premier shareholders.
News of the deal sent the department store’s share price soaring, notching up a 25 per cent gain to 81c in just two days.
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But what of the future?
“The company has $3.3 billion in annual turnover and a significant footprint but its margins are not good enough,” the insider says.
Investment, improving customer service and lifting the performance of the company’s loyalty program are top of the list of to-do’s once Lew assumes control.
Aiding him in that quest will be Olivia Wirth, currently occupying a dual role at Myer as chair and chief executive.
The former head of Qantas’ frequent flyer program – which became a significant earnings generator for the airline – she has been tasked with ramping up the division with offerings both for in-store and online customers.
Full circle
Lew’s return to chair the company will complete a four-decade flirtation with the retailer.
Not all of it has been a happy experience.
Controversial share deals and guarantees including the now infamous “Yannon transaction“, which cost Myer significant sums, were investigated by the corporate regulator without any adverse finding against Lew.
But the reputational damage spilled over onto the board in 2002 when then-chairman Stan Wallis successfully campaigned to have Lew dumped.
In the intervening years, he’s dived into David Jones and Country Road, where he made massive profits, and been actively involved in managing a range of clothing brands such as Portman, Dotti, Just Jeans, Jay Jays and Smiggle through Premier.
Premier’s share price has certainly outperformed Myer, currently sitting just shy of record levels.
But Myer maintains its allure.
“He certainly has a fascination for Myer,” his former colleague explains.
“But with Solly, sentiment never overrides commercial reality.”
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