What: Myer Holdings Ltd (ASX: MYR) Chief Executive Officer and Managing Director Bernie Brookes on Monday morning announced that he would be stepping down from his position, effective immediately.
Mr Brookes will be replaced by Richard Umbers who has been with the company for six month as Chief Information and Supply Chain Officer. Mr Umbers has been tasked with leading a program to turn Myer into a company that can adapt faster to changing conditions and be closer to its customers.
So What: Mr Brookes has been with Myer for eight years and has seen the company through a transformation under private equity, which led to a public listing in 2009 followed by a period of tough conditions.
The company's performance has been mediocre: the share price has never traded above its IPO price of $4.10, revenue has fallen from $3.26 billion to $2.74 billion, net profit has fallen from $104 million to $98 million, and the company faces more competition than ever.
Not only is competition increasing but the whole local retail sector is feeling the pinch of weak consumer confidence and weak retail spending. Competitors from OrotonGroup Limited (ASX: ORL) to Kathmandu Holdings Ltd (ASX: KMD) are reporting falling year-on-year sales, something which Myer has thus far been able to avoid.
What Now: A change in leadership could be just what's needed at Myer. The share price is 29% lower over the last 12 months and the purchase of David Jones by the South Africa-based Woolworths group removed one of the few remaining merger options Myer had.
I believe shareholders will view Mr Brookes' succession well, however it does not guarantee success going forward. Myer and its local competitors face increased competition from overseas giants, both online and in malls all around the country.
Myer's approach in the past has been to stock exclusive lines, especially in fashion, which has worked to a degree, but does not give the company any long-term competitive advantage over peers.
