Myer deal could lead to store closures for Just Jeans, Portmans, Dotti and more
Myer has proposed a merger with the clothing brands owned by Premier Investments, including Just Jeans, Portmans, Dotti and Jacqui E.
Shopping centres around the country could get a shake-up if a proposed merger between Myer and the clothing brands owned by Premier Investments goes ahead, with speculation already circulating that the deal could lead to the closure of standalone Just Jeans, Portmans, Dotti and Jacqui E retail stores.
A tie-up between Myer and Solomon Lew’s Premier Investments has been expected for some time given Premier’s more than 31% shareholding in the iconic Australian department store. On Monday, the retailers revealed what that would look like.
Premier Investments owns clothing brands and shopping centre mainstays Just Jeans, Jacqui E, Dotti, Portmans and Jay Jays, along with faster-growing brands Peter Alexander and Smiggle, which have previously been earmarked to be demerged from the larger group.
The proposed deal would see Premier’s Apparel Brands business merge with Myer in exchange for new Myer shares. Premier would then distribute all of its shares in Myer to Premier shareholders, and as such, Premier Investments would cease to hold shares in Myer.
The transaction would reportedly result in Lew becoming the largest shareholder in Myer, through his stake in Premier Investments.
It would also see the prominent rag trader gain his long-awaited seat on the Myer board.
Peter Alexander and Smiggle would not be included in the deal, which industry experts are already expecting will result in Premier choosing to close standalone stores in non-premium shopping centres.
According to The Australian, the deal could also see Myer-owned clothing labels Sass & Bide, Marcs and David Lawrence moved into standalone stores leased by Premier Investments, and brands like Dotti, for which Premier has retail store leases, moved into Myer stores.
Overall, Premier Investments has 1153 retail stores in its network, in six countries, the majority of which are reportedly run on short-term leases.
Excluding Peter Alexander and Smiggle stores, Premier’s retail store network includes 717 locations.
Elisa Barnard, a senior retail strategist at RetailOasis, estimates the combined business could look to reduce total store numbers by between 10-12% if the deal goes through.
“It wouldn’t be surprising if standalone stores were to close, particularly poor performers, due to Myer wanting to consolidate and ensure they are acquiring a future-proofed business,” Barnard told SmartCompany.
However, Barnard says the effect on other shopping centre retailers would depend on the retail mix of each specific centre.
“For instance, there could be less foot traffic of particular customer cohorts that would have typically shopped at those specific stores (e.g. Just Jeans),” she adds.
Myer proposal “a sound move”
In a statement to the Australian Securities Exchange (ASX) on Monday, Myer said the proposal is part of a “comprehensive and ongoing strategic review” of the 124-year-old business, which is focused on “enhancing and expanding its private label and exclusive brands portfolio”.
The Apparel Brand portfolio, which Myer says is “highly complementary” to its own, recorded revenues of $845 million in the 2023 financial year.
Combining Myer and Apparel Brands offers “significant potential synergies and prospects for growth”, said Myer CEO Olivia Wirth in the statement.
“While Myer has one of Australia’s strongest retail brands, store networks and loyalty programs, there is a significant opportunity to reinvest in our product offerings, customer engagement capabilities and further optimise our supply chain to achieve our full potential,” she added.
The announcement has largely been received positively by the market, which Barnard says is not surprising given the potential upsides, particularly for Myer’s supply chain.
“The brands Myer is seeking to purchase would help bolster their overall offering, plugging some of their weaknesses, such as their lack of a strong denim offering,” she says.
“Myer is also not new to the branded retail space, already owning the likes of Sass and Bide and Marcs.
“They have experience with purchases like this, so the proposal is a sound move pending completion of appropriate due diligence on both sides and a strong implementation plan to realise the potential synergies at play.”
At this stage, the discussions between the two parties are preliminary, non-binding and exploratory in nature. Terms and pricing for the deal are yet to be determined.
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