Myer may be preparing to launch a fresh acquisition spree for bolt-on fashion and house-ware brands after quietly setting up a corporate vehicle aimed at owning and operating free-standing retail stores.
The move comes as Myer continues to entice upmarket rival David Jones into merger discussions to create a $3.2 billion department store behemoth that is pitched to help both chains slash their cost bases as well as better fend off incursions from the rush of foreign retailers setting up in Australia’s shopping centres and through dedicated online stores.
Documents obtained by Fairfax Media show that 12 days ago Myer established a new corporate entity, FSS Retail, believed to stand for ”Free Standing Stores”, which will potentially aggregate under the national retailer’s wings several new fashion outlets that operate outside Myer’s traditional department store format.
FSS Retail begins its corporate life with three directors; Myer chief executive Bernie Brookes, Myer’s chief financial officer, Mark Ashby, and its head of strategic planning, Greg Travers. Among his many roles, including being in charge of the office of the CEO, Mr Travers is responsible for reviewing and delivering new business opportunities for Myer.
FSS Retail is potentially being positioned to help Myer expand from its network of 67 department stores around the country by building free-standing stores that might be placed within shopping centres or along suburban retail strips.
It will also help Myer in its ambition to expand its portfolio of exclusive brands.
Last financial year Myer’s exclusive brands grew its sales by $40 million and now account for 20 per cent of the department store’s $3.1 billion in annual sales.
The retailer has set itself a target of 1 per cent growth in its Myer exclusive brand category over the next few years and the bulk of that is expected to come from acquiring new fashion labels that bring with them a portfolio of free-standing bricks-and-mortar stores.
In September Myer bought the 35 per cent of popular label sass & bide it didn’t already own for $30 million – adding to the $43 million it paid for its initial majority stake – handing it sass & bide’s portfolio of 25 free-standing stores in all mainland capital cities as well as New York and New Zealand.
In December last year senior Myer executive Megan Foster stepped down as boss of the sass & bide chain, returning to the department store fold to run its free-standing stores.
As yet Ms Foster, a one-time general manager of marketing for Myer and responsible for the $300 million redevelopment of its flagship Melbourne CBD store, is not a director of FSS Retail and it is unknown whether she will play any part in its development.
Meanwhile, further investor pressure is expected to weigh on the David Jones board this week to push its directors to begin merger negotiations with Myer. The pressure increased after Myer chairman Paul McClintock sent a letter to his counterpart at David Jones signalling some flexibility in a fusing of the two national department store chains.
The David Jones board at first rebuffed the Myer merger proposal, but late last month looked to have softened its stance, saying it would consider any proposal that was on terms that were in the best interests of its shareholders.
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