The Yanks were confirmed today as buyers of Myer and its Melbourne main store property for $1.4 billion, $50 million more than all forecasts, tips etc in the morning press.
The announcement sent Coles Myer (soon to be Coles) shares racing over the $10 mark to $10.38 just after 11am (a high of $10.42) as the prospect of a cash return to shareholders became a bigger possibility. The sale unmakes most of the silly merger back in 1985 of Coles and The Myer Emporium. Myer’s discount arm, Target, is staying with Coles. Coles management should have flogged it or KMart because they have a history of erratic performance, just like Myer.
But< amid all the shouting and hurrahs, a couple of points should be considered. Bill Wavish as executive chairman isn’t the most positive of management moves. He has little retailing experience, couldn’t get on with the Woolworths board, had problems relating to executives in Woolies Supermarkets business, and is a chief financial officer type, not a merchandiser.
He will get help from some Poms and Yanks from Newbridge Capital (the buyer) Debenham and Neiman Marcus chains. Gee that will terrorise the David Jones board and management!
When was the last Pommie retailer a success out in Australia? Steve Cain, a Pom, couldn’t make a go of his job as head of Supermarkets at Coles Myer. He left after an internal revolt but still took around $4 million dollars with him. Dawn Robertson, a yank, is leaving Myer after a richly rewarding term for herself, but one that was characterised by indifferent performance up till the last six months.
The presence of Peter Wilkinson as an “adviser” to Newbridge though should be helpful. A former boss of Myer and David Jones, he at least knows the Australian and world retailing scene. And in his retirement he sold products to ordinary customers at a small specialty foods business near Sydney. So he at least has hands on experience.
Perhaps the smartest move of all in Australian retailing was the decision last year by the David Jones board to put CEO Mark McInnes and Chief Financial Officer Stephen Goddard in very rich golden handcuffs to keep them put. Both have form with Peter Wilkinson. As David Jones boss, he headhunted both executives from Coles Myer back in around 1997 to bolster David Jones and with the idea that one would succeed him.
Earlier at David Jones, Wilkinson, Goddard, McInnes and several other executives were involved in starting Office Works for Coles Myer, one of the few retail successes that the company has had since the merger back in 1985.
Bill Wavish doesn’t have any sort of deep retailing experience, and certainly not in department stores, which are very different to supermarkets (stock turns are lower for one and the inventory management systems are very different). Fashion and retailing sense plays a big part, not financial engineering.