Myer’s new boss, Olivia Wirth, the former Qantas Loyalty boss, said the department store had more to explore to achieve its full potential.
“As part of this review, Myer is exploring both organic and inorganic investment opportunities that align with our strategic focus areas to create value for Myer shareholders,” she said in a statement.
Myer executive chairwoman Olivia Wirth is in talks with the company’s largest shareholder to acquire a suite of their clothing brands.Credit: Dominic Lorrimer
“It quickly became clear that the idea of a combination of Myer and Apparel Brands offered significant potential synergies and prospects for growth, evidently warranting further examination.”
With a background in growing revenue from loyalty programs, Wirth is focused on growing the Myer One program, which already has more than 7 million members, and is eager to leverage Premier’s existing customer base to fold into Myer’s network.
Loading
For instance, a young shopper of Dotti or Jay Jays brought into Myer’s loyalty program would be encouraged to stay with and spend at Myer as they grow older.
Premier’s footprint of over 700 stores across the country is also appealing to the department store and would give it leverage to renegotiate with landlords.
Under Wirth’s leadership, Myer has also decided to halt its sale of the David Lawrence, Marcs and sass & bide brands as it builds out its own stable of exclusive brands. Cost synergies from a potential merger could see these brands receive fresh investment.
In its own statement, Premier also acknowledged the talks and said the proposal warranted further consideration.
“Premier also believes that there may be [a] meaningful opportunity for both businesses from the proposal. The proposed combination has the potential to deliver a step change in Myer’s scale and market position, deliver synergies and drive sustainable earnings growth,” it said in a statement.
Both companies will undertake reciprocal due diligence and discuss the terms of a potential transaction.
“There is no certainty that the proposal will result in a binding offer or transaction, and any agreement to pursue the proposal would be subject to Premier Board approval.”
Meanwhile, it will continue working towards the Smiggle and Peter Alexander demergers.
Premier has appointed UBS as a financial advisor and Arnold Bloch Leibler as a legal advisor, while Myer is being advised by Barrenjoey and Clayton Utz.
Premier is a bigger business than Myer, with a market capitalisation of 5.1 billion, compared to Myer’s $639.7 million.
Apparel Brands (Just Jeans, Jay Jays, Portmans, Jacqui E, and Dotti) make up nearly half of Premier’s total sales, accounting for 47.4 per cent of sales in the first half of the 2024 financial year. During that period, Apparel Brands brought in $416.3 million, representing an 8.1 per cent drop from the same period a year before.
Premier’s pyjama brand Peter Alexander is holding up the strongest in a tough trading environment, whereas Smiggle and Apparel Brands’ sales slid across the board in the first half of 2024.
Just Jeans and Jay Jay’s sales fell 7.2 and 7.5 per cent respectively; Portmans is down 15.7 per cent; youth brand Dotti dipped 1.3 per cent; and Jacqui E slid 6.1 per cent. Peter Alexander sales rose 6.7 per cent while Smiggle dipped 3.6 per cent.
In March this year, Premier announced a new loyalty program across Apparel Brands that would be complete by this Christmas. If Premier successfully spun off Peter Alexander and Smiggle into separately listed entities and sold Apparel Brands, it’s unclear what brands would remain in Premier’s stable.