Myer’s top two execs step down; shares fall

SYDNEY: Australia’s largest department store chain Myer Holdings Ltd announced yesterday the departure of its top two executives, sparking a tumble in its shares as investors worried the company may have lost faith in a strategy to halt sagging sales growth.

Myer named newcomer Richard Umbers as its chief executive after long-time CEO Bernie Brookes and chief financial officer Mark Ashby stepped down before completing a strategic review aimed at reviving sales.

But the structural challenges facing Myer, including the growth in online shopping and stiff competition from foreign fast-fashion apparel retailers, are seen as too stiff for just a change in leadership to overcome.

“The market is concerned that things are worse than they first thought. You’ve got a company that hasn’t been performing and the board has lost confidence in what the CEO and CFO are doing,” said Paul Kasian, head of asset management at EQT Funds Management.

Myer also said Daniel Bracken has been appointed deputy CEO. It said the market would be updated on its strategic review in “due course”.

The retailer’s shares fell as much as 13%, before closing down 10.8% at A$1.655.

Net sales at Myer, which has 67 namesake department stores across Australia, has dropped each year since 2010 as foreign retailers such as Japan’s Uniqlo, Zara and Sweden’s fast-fashion chain H&M beefed up their presence.

Myer posted its lowest annual net profit in seven years for the 12 months to July 26.

Its performance underscores the downturn in revenue faced by Australian retailers as wages grow at their slowest since at least the late 1990s.

Myer will announce interim results on March 19.

The elevation of Umbers, who joined Myer only six months ago as chief information and supply chain officer, to the top job could signal a shift in its sales strategy, some analysts said.

“Making him the new CEO signals that there is going to be a strong emphasis on two key areas — online sales and in-house brands,” said Julia Lee, equities analyst at Bell Direct.

Despite the slump yesterday, Myer’s shares are still up more than 18% this year. Last year, Myer walked out of a takeover battle to buy struggling rival David Jones, later sparking talks it could be the next target.

There would be limited appetite to acquire Myer at this price, some analysts said.

“Maybe if the shares fall below a buck they may get interesting but they have too many stores, leases are too long so it’s difficult to rationalise the store network. They’ve got myriad problems,” said Don Williams, chief investment officer at Platypus Asset Management.