The war of words between Myer and Solomon Lew has escalated after the troubled retailer’s shares went into freefall following its forced admission of another fall in sales.
Myer chairman Garry Hounsell on Monday lashed out at what he called a “grossly misleading and inflammatory” campaign by Mr Lew’s Premier Investments, “designed to benefit them and them only.”
The attack was a response to Mr Lew’s latest call for shareholders to rise up against the Myer board, which admitted to a decline in first-quarter sales following a query from the ASX.
Mr Hounsell said Mr Lew, who owns 10.77 per cent of Myer, had offered no constructive advice, failed to inform shareholders of his intentions, and was intent on unsettling a refreshed board that was trying to turn things around.
“One can only assume they are trying to take control of Myer under the guise of seeking an ‘independent board,'” Mr Hounsell wrote in a letter to shareholders ahead of Myer’s annual general meeting on November 30.
“This hostile campaign impacts negatively on customers, team members and, ultimately, on you our shareholders; and Premier Investments should be ashamed of this.”
Mr Hounsell repeated his assertion that Premier Investments, which owns Smiggle and other brands, was conflicted because it is both supplier and competitor to Myer.
He said entities associated with Mr Lew accounted for more than five per cent of Myer’s full-year sales.
He said granting Mr Lew boardroom access would be against Myer’s fiduciary duty to shareholders.
“We are extremely disappointed by the actions of Premier Investments and their ongoing hostile campaign directed to shareholders via the media, which is designed to benefit them and them only.” Mr Hounsell wrote.
Myer shares fell as much as 15 per cent on Monday when they came out of a trading halt, before paring losses to sit at 41.5 cents at 1550 AEDT – still down 7.8 per cent.
Mr Lew fired off his latest letter to shareholders at the weekend after Myer had been forced into a trading halt by the ASX following media suggestions it may have breached disclosure rules by failing to detail the extent of a sales decline.
The company subsequently admitted first-quarter sales fell 4.8 per cent, and 4.3 per cent on a comparable store basis.
“A sales drop of 4.8 per cent is something that even Father Christmas can’t turn around,” Mr Lew said.
“Myer’s admission that its online sales growth has flatlined is also of major concern as this should be an automatic area of growth in line with every other retailer.”
The department store chain had already slumped to a full-year loss of $486 million following a 3.2 per cent sales decline in the 12 months to July 28, slammed by $541.2 million in costs and significant items.
Myer shares – which had been valued at $4.10 at its 2009 IPO – have now fallen more than five per cent 20 times this year.