Myer and Solomon Lew’s Premier Investments shake hands on Apparel Brands deal

Myer and its most ardent past critic have struck a near-$1 billion deal for the department store chain to buy his company’s suite of fashion brands, including shopping mall mainstays Just Jeans, Jay Jays, Jacqui E, Dotti and Portmans.

Solomon Lew’s Premier Investments and Myer announced the long-awaited deal on Tuesday.

The combination of the two groups will make Myer a formidable player in Australia’s fashion sector and spread its reach and influence far beyond its current footprint of 64 stores.

Myer will issue 890.5 million new shares to Premier to fund the purchase of Apparel Brands — making Mr Lew’s private investment vehicle Century Plaza Group its biggest shareholder with a 26.8 per cent stake — while Premier will offer a cash contribution of $82 million.

Based on Myer’s closing price of 97¢ a share before the terms were announced, the deal is valued at $863.8m.

Once finalised early next year, Premier will hold 51.5 per cent of an expanded Myer that is now expected to generate more than $4 billion in annual sales and earnings of $250 million.

Mr Lew will return to Myer’s board as a non-executive director while also continuing to hold a 40 per cent stake in Premier.

Myer said the “transformational” deal delivered significantly enhanced scale and capabilities to drive growth across a larger combined group.

A potential tie-up was revealed in June, just weeks into executive chair Olivia Wirth’s tenure after she jumped ship as boss of Qantas’ loyalty program.

If backed by shareholders, it will create a leading retail group with more than 780 stores across Australia and New Zealand, with a “large and highly engaged customer base”.

Ms Wirth told The Nightly those talks were part of a strategic review that focused on how Myer could leverage its already “solid platform to grow over the next five to seven years.

“And part of the opportunities for us is really around product, particularly our private label, and how do we rethink those very important brands which are part of the overall curation of products in our stores,” she said.

“And that started off a conversation and approach that we made to Premier about the potential acquisition of a Apparel Brands ... and how we can potentially supercharge the opportunities that exist for Myer by combining with the Apparel Brands.

“We’re all very much aligned on the benefits that it provides to the consumers, to our people and also to, importantly, to our shareholders.”

Apparel Brands has 719 stores across Australia and New Zealand catering for the full spectrum of shoppers — from 13 to 18 year olds at Jay Jays through to 35 to 80 year olds at Jacqui E

It has 5500 staff and last financial year generated $791m in sales, with online accounting for 16 per cent of the total. Just Jean is by far its biggest asset, with 237 stores and revenue of $294m. Dotti and Portman bring in $92m each.

Myer reported sales of $3.3b across its network of 64 stores, which includes eight high-end specialty fashion stores.

Premier said the sale of its fashion brands would allow it to focus on the international growth opportunities of its highly successful Peter Alexander sleepwear brands and kids stationery juggernaut Smiggle, which combined brought in revenue of $805m last financial year.

It will also hold on to its stake in Breville Group and various real property assets.

Mr Lew has been a long-time agitator on Myer’s register and in the past has called for a clear-out of the board to improve dwindling sales.

As a teenager, he supplied dresses to the Myer Emporium, later obtaining an almost 10 per cent stake in Myer Emporium Ltd by 1983.

By 1991, Mr Lew had claimed the seat as Coles Myer chair but was removed in 2002.

He began voicing his concerns with Myer’s management in 2017, openly criticising then-chair John King. Mr King announced his retirement as executive chair in June 2023, stepping down from Myer in 2024.

“This is an opportunity for our team and our shareholders to play an important role in the future of the Australian and New Zealand retail landscape,” Mr Lew said.

“Myer and our Apparel Brands will be stronger together – delivering vertical integration, scale, additional margins and loyalty opportunities.

“Meanwhile, Premier’s board will be focused on the ongoing growth and performance of Smiggle and Peter Alexander, including as they pursue local and international growth opportunities.”

Ms Wirth told The Nightly Mr Lew was an experienced businessman, particularly in retail, “and he’ll be a welcome addition to the board, alongside my fellow directors”.

She also noted the deal would allow Myer to leverage the power of its loyalty program and bring benefits to its 10.4 million members.

“This will allow our customers to earn points and to shop in Apparel Brands, and we know that that is going to be a very attractive proposition,” she said.

“We know that, for example, 40 per cent of our Myer One customers are already shopping in Apparel Brands, and this provides a unique opportunity for us to use the data and the smarts and intelligence that we get around our customers and better understand what sort of products they want on offer.

“Importantly from a business perspective, it means that we can really drive cross-sell and cross-shop. So if a customer who’s shopping in Just Jeans, she or he will definitely have other areas of spend.

“And we want to ensure that through the Myer One program, that it puts Myer front and centre. We believe this Myer One ecosystem — which will absolutely be the core driver of this retail platform — with the combination will start to ensure that we can have a greater share of consumer spend in the Australian market.”

Ms Wirth said Myer was still working on a review that would help enhance the shopping experience in its own stores.

The merger is expected to create $30m in annual synergies. Before completing the deal, Myer said it intends to declare a fully franked dividend of 2.5¢ a share to existing shareholders.