Lew may be Myer’s only hope now

IN THE ongoing disaster that is Myer there are two intriguing puzzles that have gone seemingly unnoticed and certainly unremarked.

Why did former CEO Richard Umbers had to leave the building immediately? The actual sacking should have been no surprise.

He had ‘bet the bank’ – his ‘New Myer Strategy – on Myer ‘hitting it out of the park’ through Christmas-New Year. But rather than sixes, he and Myer hit zeroes.

But why the immediate departure?

When Umbers went, Myer and its shareholders ended up with an accountant, the chairman Garry Hounsell, taking the wheel as ‘executive chairman’.

That was sorta like the chairman of the White Star line – who was actually on the Titanic on its ill-fated maiden voyage – insisting on taking its wheel after hitting the berg.

Let me summarise. A lifetime accountant who has a somewhat indifferent attitude to retail reality and has been on the Myer board for all of five months thinks he can be such an effective executive chairman that he can dispense with its CEO.

A person contemplating that might conclude it would probably be better for them to exit and to leave even a flawed CEO.

But that brings us to: why did Hounsell agree to join the Myer board and move immediately to the chair?

Myer’s trading difficulties were public. It had just announced a shock profit downgrade and sacked its deputy CEO – not only the group’s chief merchandise and customer officer, but with Umbers, one of the creators of New Myer.

The existential threat to a sprawling bricks and mortar department store group like Myer posed by the internet was blindingly, threateningly obvious. Oh, Hounsell says he doesn’t know about that.

Solomon Lew was sitting on the Myer register as the biggest shareholder: a shareholder who was both pissed and opportunistic.

I wonder whether Hounsell had ever read the business pages – oh, I don’t know, any time in the past 15 or so years – and noticed what a minority shareholder named Lew did as a ‘pissed and opportunistic’ shareholder in a retailer called Country Road?

Obviously not: as he was prepared to, first, walk into the boardroom of an existentially challenged retailer with Lew on its case; with the specific, agreed, objective of taking the chair.

The only ‘hero CEO’ out there is former David Jones CEO Mark McInnes – who sits at Lew’s right hand in Premier. Lew’s masterstroke will be to offer him to Myer for, say, two years.

But more broadly, with this history – and Myer’s increasingly likely ‘future’ there is no way a rational Myer shareholder could trust the current chairman and the current board to pick even a terminal CEO.

Lew has conflicts as a major supplier that have to be managed. Although, it doubles the skin he has in the Myer game and in working towards its survival.

He would not only lose the $100 million Premier had invested in Myer if it went belly-up; he would also lose his lucrative supply contracts.