Umbers battles on after Myer profit warning
Myer chief executive Richard Umbers is refusing to be drawn on whether he has offered to resign after overseeing a third profit warning since launching a $600 million turnaround strategy in late 2015.
He has put up a spirited defence, saying he can’t “lose faith” and that he is “getting stuck in”.
Mr Umbers said his Myer team weren’t the kind of people to be thrown by setbacks.
“We have to keep our eye on the prize, even though in the context of this result that might seem way off,” he said. “It is interesting that we are still making really good progress on so many elements of the strategy, but getting on with it is really the important thing here.
“What we have got to do is not be interrupted because of what has happened. We need to actually get on with it and really trade the business hard.”
But he soon might not have any choice, with Myer’s latest profit warning and share price rout adding weight to billionaire and major shareholder Solomon Lew’s campaign to tip out the entire Myer board at an extraordinary shareholders meeting.
Speaking to The Weekend Australian yesterday after Myer un- veiled a shock profit downgrade in the wake of worsening sales in December and January, Mr Umbers hinted that he was not leaving in the near future and emphasised his commitment to his “New Myer” strategy despite horrendous retail conditions.
“I can’t lose faith in what we are trying to achieve here, and we have got to see through the strategy and make sure that we use occasions like this to really make sure that we are putting the right emphasis into changing the business,’’ he said as shares in Myer fell 9.3 per cent to a new low of 58.5cs.
Myer was floated in 2009 by its private equity owners at $4.10 per share.
Myer’s biggest shareholder, Solomon Lew’s Premier Investments, yesterday said Myer was in “peril”.
“As Premier has said from the outset, the numbers don’t lie. Today’s numbers show that the disastrous sales and profit decline within Myer is accelerating,” the company said.
“Myer is now in peril and shareholders must urgently unite to save the company and what is left of our investments. Premier will caucus with other significant shareholders in order to reconstitute the entire Myer board.
“Following shareholder discussion, a board comprised of a majority of independent directors would be put to a proposed EGM of all shareholders.’’
Earlier this week Premier said it would soon call an EGM to eject all Myer directors.
Mr Umbers said there were some positive signs, including slimmer inventory positions, cost cutting, an improved Myer One loyalty scheme, better use of data and 48.9 per cent first-half growth in online sales.
“These are all demonstrating the progress we are making here, and for me it’s about making sure we do stay true to that and committed to the long term strategy. But I absolutely recognise that in the short term we have got to trade the business hard and make sure we are really responding to the trading conditions … and it’s a tough market.’’
Myer yesterday told the Australian Securities Exchange that after like-for-like sales were down 5 per cent in the first two weeks of December, trading during the key stocktake sales period was also below expectations, with total sales for January down 6.5 per cent on the previous corresponding pe- riod. Total sales for the first half of 2017-18 were down 3.6 per cent to $1.719bn, the company said, and down 3 per cent on a like-for-like sales basis.
Myer said despite the sales shortfall through December and January, it remained comfortable with the quality of its inventory.
As a result of this worsening sales performance, Myer expects first-half 2017-18 net profit to be between $37m and $41m before implementation costs and other significant items. This is down more than 40 per cent.
Myer chairman Garry Hounsell said he recognised that shareholders would be disappointed with the announcement.