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Myer CEO Richard Umbers steps down amid turmoil

Sydney Morning Herald logo Sydney Morning Herald 5 days ago Patrick Hatch

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Myer chief executive Richard Umbers has left the under-siege department store after its chairman and board decided change was needed to "turbocharge" its attempts to arrest falling sales and profits.

The company said on Wednesday morning Mr Umbers had stepped down effective immediately, five days after its latest profit downgrade, and that it would begin the search for a new CEO.

Myer chairman Garry Hounsell said the decision reflected his "impatience and the board’s impatience to speed up the execution" of Myer's turn-around strategy.

“We’re going to turbocharge a number of things that we’ve been looking at," said Mr Hounsell, who will oversee day-to-day operations as executive chairman until a new CEO is found.

“I’m going to have an absolutely different sense of urgency than Richard might not have had because he was executing a strategy that he embarked upon three or so years ago."

Myer chief executive Richard Umbers has stepped down. © Paul Jeffers Myer chief executive Richard Umbers has stepped down. Mr Umbers had been in the top job since March 2015. His exit follows a series of profit downgrades, declining sales and a collapse in Myer's share price.

Myer last week revealed January sales were down 6.5 per cent compared to last year, and warned its first-half profit would be down as much as 42 per cent. Shares, which floated at $4.10 in 2009, hit an all-time low of 58¢ after that announcement.

Last week's downgrade was the final straw that led to Mr Umbers’ departure, Mr Hounsell said.

Mr Umbers' former deputy, experienced retailer Daniel Bracken, left Myer last July.

The move comes as billionaire retail veteran Solomon Lew's Premier Investments ramps up its campaign to have the Myer chairman and his board ousted.

Premier, which is Myer's largest investor with a 10.8 per cent stake in the company, last week confirmed it would hold an extraordinary general meeting to try and roll the board and replace it with a new one.

"Today’s announcement regarding the latest executive departure from Myer demonstrates a total lack of judgement from the Myer board and a complete abdication of responsibility,"  Premier said in a statement.

Mr Hounsell did not have the relevant operational retail experience to act as executive chairman and his appointment should "give great concern to all of Myer’s shareholders, customers, employees and suppliers", it added.

Mr Hounsell said the impending shareholder vote on his continued chairmanship had “nothing to do” with his decision to push Mr Umbers out.

Myer CEO Richard Umbers and Jennifer Hawkins © Scott Barbour/Getty Images Myer CEO Richard Umbers and Jennifer Hawkins Myer also last week flagged that it was preparing to write down intangible assets on its balance sheet, which at almost $1 billion are currently about twice its million market value.

That has raised speculation Myer might test debt covenants it has with its bankers.

Mr Hounsell said he had “no idea” how big the writedown would be, but that he did not believe there was any risk Myer would go into administration and did not expect it would breach any debt covenants.

Mr Umbers spearheaded the $600 million "New Myer" strategy designed to reinvent the retailer through improved productivity, a better product range and an "omni-channel" push to bridge online and in-store shopping. But the strategy was missing its key metric targets, and had to be revised.

Mr Hounsell backed the strategy when he was appointed chairman in November and on Wednesday said it remained the right path for Myer, while conceding some areas would have to be tweaked, especially when a new CEO is appointed.

“I think it’s the right strategy, but I’m also open to someone new coming into the business to question it," he said.

Credit Suisse analyst Grant Saligari said that even given the structural issues Myer faced, the company under Mr Umbers had not operated as well as it could have.

“So the opportunity is probably to bring in someone with very strong retail skills to try and elevate the performance,” he said.

Mr Umbers will be paid for the next 12 months. His base salary was $1.2 million last year.

Garry Hounsell (left) and Richard Umbers at Myer's AGM in November. © Eddie Jim Garry Hounsell (left) and Richard Umbers at Myer's AGM in November. Mr Hounsell will be paid a salary as executive chairman that will be determined with the help of external advisors, Myer said.

Asked on Friday how much time he thought he had left to improve Myer’s performance, Mr Umbers told Fairfax Media he became CEO “with the full knowledge I was leading an organisation through a period of very significant change, and I would need to have the resilience to be able to cope with that”.

Myer's closed up 1.8 per cent at 54¢.

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