Myer's board, management should remain, investor Wilson Asset Management says

20 September 2018 8:59am

19 September 2018. By Laurel Henning

Unseating the board at Australian department store Myer and ceding to pressure from activist investor Solomon Lew is illogical, Wilson Asset Management fund founder Geoff Wilson has told MLex. Wilson’s fund disclosed a 5.46 percent stake in Myer on Friday. The retailer's share price recently reached its highest level in seven months.

Wilson told MLex today in an interview that there would be “no logic to destabilizing the board, which may destabilize management and eventually, customers.”

Wilson’s initial comments in Australian media in support of British former House of Fraser chief John King — Myer's new head  — and criticizing Premier Investments’ Solomon Lew drew fire from the billionaire investor.

Lew said on Monday that Wilson had misunderstood his intentions at Myer and that his issue was with the company’s board, not its management, inviting Wilson to join his efforts to oust the board. Wilson said, however, that the company’s board and management went hand in hand.

“It’s time to back the new management team," he said. "My focus is to give new management the best chance of succeeding in an economic environment which is very difficult.”

Retailers are struggling as customer demand slows and companies try to cover ground rents while facing down fast-fashion competitors.

Wilson spoke favorably of King as a “proven retailer” who would bring in a new team as he settled into his new role at Myer. In fact, it’s the new management at Myer that attracted Wilson to begin building his 5.46 percent position in the company back in July, making a first investment on July 4.

King spent eight years heading up British department store chain House of Fraser, before stepping down after Chinese conglomerate Sanpower bought the 165-year-old company.

“We look for a catalyst to rerate share prices. A new management team is a catalyst,” Wilson told MLex.

Although Myer share prices have risen since Wilson’s disclosure and are today trading at A$0.54 ($0.39), they’re down more than 50 percent since March 2017, when Premier Investments bought a 10.77 percent stake in the firm.

When asked if he had spoken with Lew, Wilson said the pair had “had a chat” on Sunday at a charity event they had attended, but that no formal meeting had taken place.

Wilson added that he hadn’t yet spoken with Myer’s second-largest shareholder, Investors Mutual, but that he would be open to talks. Investors Mutual holds a stake of more than 9 percent in Myer and has faced criticism in the past by Lew for supporting the company’s board.

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