The combination of Myer with Premier’s five apparel brands is expected to deliver pro forma historical annual sales of approximately $4 billion and a reported earnings before interest and tax (EBIT) of $236.3 million, as reported in FY24 by both entities.
This according to explanatory booklets shared to Myer and Premier shareholders, which combines Myer's $3.26 billion in total sales for FY24 - down by 2.9 per cent from FY23 - with the $790.7 million accrued by Premier's apparel brands - Just Jeans, Jay Jays, Jacqui E, Dotti and Portmans - in the last financial year, down 6.4 per cent on FY23.
Going on FY23 numbers, total combined sales between Myer and Premier's apparel brands would be $4.2 billion.
As for EBIT, Myer recorded a 17.1 per cent fall in the measure to $162.7 million. This indicates that EBIT for the five apparel brands under Premier was $73.6 million, which added to a total EBIT for Premier in FY24 - including Smiggle and Peter Alexander - of $325.91 million, a decrease of 8.6 per cent on a record FY23.
The deal should also create a pro forma historical net cash position of $224.5 million, as reported at July 27, 2024. Myer's net cash as of then was $113.8 million.
This news comes as Myer and Premier shareholders weigh up the deal before voting on it in late January. As part of the deal, Premier will offload Just Jeans, Jay Jays, Jacqui E, Dotti and Portmans to Myer - and $82 million in cash - in return for 890.5 million Myer shares that will be distributed equitably to Premier shareholders.
This equates to approximately 51.5 per cent of the enlarged number of shares on issue for Myer following the proposed transaction, with company directors at both Myer and Premier unanimously calling for shareholders to approve the deal.
As a result, Century Plaza Group - for which Premier chair Solomon Lew is a director - will become Myer’s largest shareholder owning approximately 26.8 per cent of the department store business. Century Plaza will also remain the largest shareholder in Premier at approximately 40 per cent.
Lew himself also intends to join the Myer board as a non-executive director if the deal goes ahead, in addition to continuing his role at Premier.
The Premier booklet said that the deal is broadly consistent with Premier’s contribution of pre-AASB 16 FY24 EBIT from its five apparel brands. Both the apparel brands and Myer delivered a similar $76 million in pre-AASB 16 EBIT, with the apparel brands holding an EBIT margin of 9.7 per cent, while Myer held an EBIT margin of 2.3 per cent.
Meanwhile, the combined store footprint at the end of FY24 would have been 783 stores - 719 apparel brands specialty retail stores, 56 Myer department stores and eight Sass & Bide, Marcs and David Lawrence stores.
The portfolio will house eight specialty retail brands, and a significant range of brands sold through the Myer store network.
“The Combined Myer Group will have an extensive footprint of 783 department and specialty stores, supported by more than 17,300 team members,” executive chair Olivia Wirth shared in the opening letter of Myer’s explanatory booklet.
“The Combination will accelerate the expansion of our MYER one loyalty program and increase customer engagement with the combined group’s loved brands through an expanded omni‑channel ecosystem.”
The proposed transaction also benefits Peter Alexander and Smiggle under Premier, according to Lew in his opening letter, which will remain in the hands of Premier if the deal goes ahead.
“Premier will be better able to focus on the local and international growth opportunities for each in the years ahead,” Lew said. “These unique brands both started through humble beginnings in Australia.
“Fast forward to today, where both brands are leveraging their strength in Australia, New Zealand and globally. Smiggle has an established international presence through a combination of wholesale and proprietary stores. Peter Alexander has opened its first stores in the United Kingdom in November 2024, with exciting prospects for future offshore expansion.”
Premier will also continue to own its strategic interest in Breville and properties, “and is expected to have a strong cash balance and retain flexibility to pursue a demerger of Peter Alexander and/or Smiggle in the future,” according to Lew.