A majority of proxy and direct votes by shareholders at both Myer and Premier have approved of the planned combination between Myer and Premier’s five apparel brands - Jay Jays, Jacqui E, Just Jeans, Dotti and Portmans.
At Myer, 95.45 per cent of its shareholders approved of the move, with 3.82 per cent against, while over 99 per cent of Premier shareholders voted in favour of the associated capital reduction resolution and performance rights resolution. This is according to voting update documents shared on the ASX by both entities.
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. Premier chair Solomon Lew will also be appointed to Myer's board of directors following the deal, over 20 years since he was booted from the board following a shareholder revolt.
Speaking at its extraordinary general meeting today in Melbourne, Myer executive chair Olivia Wirth said the combination brings together two businesses that are highly complementary.
“The breadth of Myer’s category offerings and brands, coupled with our strengths in loyalty, data and e-commerce, will benefit the Apparel Brands businesses, while their deep experience in product development, design and sourcing will uplift Myer,” she told shareholders.
“The Combined Myer Group is set to emerge as a leading retail platform across Australia and New Zealand, with unique strengths, expanded capabilities and a significant wealth of retail talent and experience.
“Our combined business will be a leading omni-channel retail platform with pro forma historical annual sales of more than $4 billion in FY24 and a stronger balance sheet to fund future investment and growth.”
The combination will create a total retail footprint of 783 stores across both entities, with an overall staff pool of 17,000 team members.
“The combination creates a more resilient Myer Group, with genuine and significant scale across Australia and New Zealand, an omni retail business with diversified earnings, a larger customer base that spans more Australians across all demographics,” Wirth said.
Recently shared projections by investment bank Canaccord Genuity show that the new Myer group can turn around recent dips in earnings for both entities, following a predicted slip in FY25 full-year EBIT.
Canaccord's note to investors reiterated past ASX disclosures by both Myer and Premier’s Apparel Brands which show that combined underlying EBIT (pre-AASB 16) in FY23 was $222.6 million, with Myer reporting $110.1 million and Apparel Brands reporting $112.5 million. This then fell 32 per cent to $152.0 million in FY24.
Canaccord analysts predict another step down now looks likely in FY25E, “with much of this being recoverable in our view.”
As for Premier, investors have indicated that Peter Alexander and Smiggle have a positive future despite a tough market currently.
Analysts at BofA Securities told investors that Peter Alexander looks to be performing in line with their expectations with continued growth.
As for Smiggle, while Premier has yet to share new details on Smiggle’s earnings performance, BofA projects the brand’s EBIT for the first half of FY25 went backwards relative to the same time last financial year.
“Smiggle's earnings were impacted during Covid (schools being closed) and with increased costs of living, families have been cutting spend with Smiggle's products being one such area,” the note read.
“Recent management instability has also been unhelpful for Smiggle,” analysts added, likely relating to the sacking of its managing director last year due over what Premier called “serious misconduct”.
“We are optimistic towards the future of Smiggle and its ability to recover/grow earnings,” BofA continued. “However, it looks to be currently in a tough position.
"We remain positive on PMV due to its strong retail execution and leverage to improve earnings when economic conditions get better. Peter Alexander also looks to be a world class business that can grow earnings regardless of the economic environment."