Ragtrader asks fashion retail experts for their commentary on the current Premier Investments vs. Myer situation.
Ragtrader founder Fraser McEwing
What is Solomon Lew, master tactician, up to with Myer?
With his Premier Investments having increased its share of the Myer share register to 15%, he might be signalling a takeover, which explains the sudden interest in the share price to push it up to 45 cents at the time of writing.
But there are better ways of killing the chicken.
Solly is still smarting over the $100 million he paid for about 10% of the book some time back.
When the Myer share price plummeted to nine cents last year, he had nominally lost his shareholders about 90 million Oxford scholars.
At that point he could have swept in and taken it over on the cheap.
But the way Myer was trading, many thought it could have gone mechula.
Solly probably saw that risk too, and didn't want to add insult to injury by losing the rest of the investment.
So he waited – something he is very good at.
The Myer board has become Premier's Berlin Wall.
Solly managed to get rid of chairman Garry Hounsell and now is in a position to mock the others at the table as they scrounge around looking for a permanent replacement.
They offered Premier a seat and Solly scoffed at it, instead telling them all to pack their brief cases and do the decent thing by buzzing off.
Simply put, Solly wants to stack the board with his people.
In this way he can control Myer without having to risk any more of Premier's money. As you'd expect, it's a clever tactic.
Of course, the board is unlikely to choose suicide, and that will lead to Solly calling a shareholders extraordinary meeting at which they will be asked to boot out the board in favour of Solly's nominees.
Watch out for a ferocious PR campaign as Premier mounts its forces on the hill.
Now this is all hype compared to the burning practical question of how to make Myer work.
I imagine a new board would give big floor space to Premier's own, and very well performing brands.
But that won't be enough for the grand old lady of Bourke Street get up and boogie.
Without Mark McInnes to help reimagine Myer along with the growing problem of making any department successful, the real story in all this mayhem is what Premier plans to do.
Solomon Lew
Retail Doctor Group CEO Brian Walker
"How do you make money? Spinoffs, split-ups, liquidations, mergers and acquisitions." - Mario Gabelli
A sector in disarray globally, performance in decline, yet an iconic Australian brand, strengthening balance sheet, improving online, need for pruning in physical space, well managed against the tide and still refining its position in offer and omnichannel retail.
Solly Lew a competitor, and supplier extends his shareholding through Premier investments and why? (Premier cashed up, job keeper assisted and trading well through COVID, a strong management team).
Premier shareholders backed Mr Lew’s decision to spend another $16 million to increase its stake in Myer in its bid to overthrow the board, but are reluctant to support a full takeover of the department store.
Premier, which is 42% owned by Mr Lew’s Century Plaza, bought 41.1 million Myer shares on Monday, increasing its 10.8% cent stake to 15.7%, and called on the entire Myer board to resign.
Why the interest, and why the conflict?
The answer probably lies as far back as 2014.
A 17-year stand-off between South African retailer Woolworths and retail magnate Solomon Lew has ended after Mr Lew agreed to accept Woolworths’s $209 million offer for his 11.8% stake in Country Road.
Woolworths, which completed a $2.2 billion takeover of David Jones last week, increased its stake in Country Road from 88% to 99.84% on Friday after Mr Lew agreed to accept the $17-a-share offer.
Earlier on Friday, Woolworths declared its $213 million mop-up offer for Country Road unconditional after receiving clearance from the Australian Foreign Investment Review Board.
Mr Lew’s decision to sell out ends one of the longest and most bitter stalemates in Australian corporate history.
Mr Lew’s Australian Retail Investments built up a near 12% share in the apparel retailer in 1997, preventing Woolworths from gaining full control, and has been a vocal critic of its performance.
So is this playbook reinventing itself ? Probably, and one could argue that Mr Lew is protecting his supply channel, buying low and selling higher, riding the last wave of this iconic retailer or genuinely believing Myer has a dominant future in Australian retailing?
Either way, a shrewd and canny operator and investor who is known for the dispassionate logic of his investments.
We suspect it’s the former rather than the latter.