Solomon Lew mocks Myer as 'Amazon's post office'

Solomon Lew mocks Myer as 'Amazon's post office'

Solomon Lew's (pictured) Premier Investments (ASX: PMV) has ridiculed the management of Myer (ASX: MYR) after the group reported a $172.4 million loss today, reigniting a longstanding feud with chairman Garry Hounsell and his supporters.

Premier Investments issued a statement today calling for the immediate resignation of the board, while also criticising CEO John King and taking aim at fellow shareholder Geoff Wilson of Wilson Asset Managemet (WAM) for backing Hounsell.

"Today's results are disastrous and shameful. Two years into John King's tenure it's clear the Myer turnaround is in tatters. It's now time for the CEO to follow the Board through the exit," said Premier, which is known for its brands such as Smiggle, Portmans and Peter Alexander.

"The numbers are dire - notwithstanding the impact of COVID-19, the business is trading beyond poorly - sales are down, EBITDA is down - on top of massive further write-downs to its brands and leases.

"Mr Wilson should now acknowledge that the continued failure of Myer is at least partially his own fault and his investors should hold him to account for the losses they have sustained and will continue to endure unless there is immediate change."

Whilst Myer reported a 98.8 per cent increase in online sales in the second half and an improved gross profit for the channel, comprising 16.8 per cent of total sales for FY20, the group's operating gross profit (OGP) decreased by 85 basis points to 38 per cent.

"Myer is crowing about its online offering, yet by its own admission online sales are actually eroding profits. After years of underinvestment, its antiquated online offering is dilutive to EBITDA margins," Premier said, in reference to a comment from King in the earnings call that "online sales were minimally dilutive".

But it was the investor's comments on Myer's tie-up with Amazon Hub, placing Amazon parcel pickup points in stores, that were arguably the most scathing.

"Myer appears to be transforming itself into the world's most expensive Post Office," Premier said.

"Its latest deal hinges on the hope Amazon customers buy something else on whim when they collect product from the Myer badged post office. It is desperate and sums up just how lost Myer is.

"It must be close to the end for suppliers who can no longer obtain credit insurance cover."

Premier added it had dramatically reduced its own exposure to Myer, and noted others had done the same.

"Investors Mutual saw the writing on the wall and bailed over the last six months, losing over 80 per cent of its investment along the way."

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