Myer’s bad timing

Myer chief executive Bernie Brookes has done a brilliant job in turning around a department store chain that was almost run into the ground by Coles Myer Group.

He’s cut costs, improved supply chain management, built a brilliant loyalty program and generally improved the chain’s profile.

He’s almost managed to list the company on the Australian Securities Exchange while implanting a 50-month turnaround program (he’s up to month 44 at the moment) which would have been no mean feat.

But for investors who bought into the Myer float, remembering Bernie’s good points is probably a little hard this morning after Myer yesterday announced a profit downgrade and Brookes revealed the company probably did its IPO too early.

“I think the original plan was to complete the 50-month turnaround, have Myer Melbourne refurbished, have two new stores open and then look at IPOing the business. There’s no doubt about that,” he said.

“My inkling was always to wait but the owners make the decision as to when they wanted to go forward with the IPO, not the management.”

Ah, that’s great to know Bernie. Particularly if you paid $4.10 for shares in the IPO, only then to see them keep dropping to the current level of about $3.47.

Had investors known that Bernie was so against the timing of the float, it’s doubtful so many would have jumped in.

Brookes is laying the blame for the poor timing squarely at the feet of TPI, the private equity firm that owned the bulk of Myer before the float.

But they are long gone now and Brookes is the man left to carry the can – and tell shareholders that the prospectus forecast of 3% sales growth for the full 2009-10 year has been cut to 1-2%.

He says profit growth will pick up to 5-6% once the turnaround strategy is complete. Brookes has done a great job executing that strategy so far, but he’d better deliver on his better-times-ahead promise.

Until he does, disappointed shareholders who bought into the mis-timed float are likely to remain pretty unhappy.