Largest shareholder of Australia's Myer wants to oust 'failed' board

The largest shareholder of embattled Australian department store operator Myer Holdings Ltd on Wednesday proposed a meeting of shareholders to vote on replacing the company’s entire board.

The move escalates a battle between the 117-year-old department store chain and its biggest shareholder, Premier Investments Ltd, which has been scathing in criticism of the board’s response to new online competitors and stagnant retail sales growth.

Premier, controlled by billionaire investor Solomon Lew, owns 10.8 percent of Myer and failed in a push to secure three board seats at Myer’s annual general meeting last November.

Since then the company has issued an earnings downgrade due to disappointing pre-Christmas trading and its shares have fallen to near record lows, while national retail sales data showed a weaker-than-expected December for retailers across the board.

Premier wants to spill the entire board, and said in a statement it has requested a list of Myer shareholders to facilitate a meeting “to reconstitute the incumbent, failed board”.

“It is not in the best interests of shareholders that the current Myer board be allowed to preside over another year of declining sales, eroding profits and further share price deterioration,” the Premier statement said.
“It should now be abundantly clear to all stakeholders in the company that a significant circuit-breaker is needed for the company to have any sustainable future.”

A Myer spokesman declined to comment.

Shareholders who control more than 5 percent of a company in Australia can call general meetings under Australian law. Resolutions, such as vacating the board and installing new members, require majority support to pass.

Once a dominant force in Australian retailing, Myer’s business model has buckled under pressure from new foreign “fast fashion” rivals, lacklustre consumer spending and flat wage growth.

“I think Solly’s got everything going for him at this point,” said Mathan Somasundaram, Market Portfolio Strategist at stockbroker Blue Ocean Equities.

“If you’re holding that stock right now, you’re probably hoping that he could do something,” he said.
Myer shares fell 0.8 percent in mid-session trading on Wednesday, while the broader market rose. Premier shares were down 0.6 percent.

Myer shares have never traded over their A$4.10 issue price when the company was floated in 2009.