May 23, 2018 / 7:10 AM / 3 months ago

Australia's Myer rebuts discounting charge, says shareholder 'conflicted'

May 23 (Reuters) - Australia’s Myer Holdings Ltd has dismissed charges by top shareholder Solomon Lew of engaging in an “extreme” discount program, and said Lew’s Premier Investments Ltd is conflicted due to being a major supplier and competitor of Myer.

The one-page rebuttal, issued late on Tuesday, was in response to a letter from Premier to Myer shareholders on Wednesday last week predicting Australia’s largest department store operator would report a “massive loss” in its annual results in September. It did not address all of Lew’s charges.

On Wednesday, Myer’s stock fell as much as 10 percent before ending down 6.4 percent at 44 Australian cents.

Once a retail heavyweight, Myer’s market value is a fraction that of its 2009 listing as it faces online competition and a revolt from Lew, who is trying to oust the firm’s entire board.

Lew’s Premier Investments, which operates fashion stores, bought 10.8 percent of Myer in March 2017. The stock has since fallen more than 60 percent.

“Premier Investments continues to be engaged in a hostile and obstructive campaign that appears to be designed to destabilise Myer,” Executive Chairman Garry Hounsell said in the rebuttal.

Premier in its letter told investors to prepare for a profit warning, and said they “may never see a dividend again from Myer unless the current board goes”.

Earlier this month, the 118-year-old firm reported a 2.7 percent fall in third-quarter sales - less than analysts had expected - and gave a start date for its new chief executive, British retail veteran John King. That led to a mild recovery in its share price.

In March, Myer reported its steepest half-yearly loss since listing. The firm has since embarked on a discounting program in an attempt to revive sales. (Reporting by Aditya Soni in BENGALURU Editing by Christopher Cushing)

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