By Tom Westbrook
SYDNEY (Reuters) - The top shareholder of Australia's Myer Holdings Ltd said on Tuesday the department store operator's turnaround strategy was failing and excoriated the board for refusing to meet him to discuss ways to save the 117-year-old company.
Once the dominant force in Australian retailing, Myer's business model has been ravaged by new online rivals and now it is a target of short-sellers who piled in after it posted its worst profit as a listed firm in September.
"Myer has lost its way," billionaire Solomon Lew, chairman of Premier Investments Ltd which controls 10.8 percent of Myer, said in a letter to shareholders published on Tuesday.
"At its height, it was a well-run business that understood what its customers wanted to buy ... sadly, those times are long gone."
Lew, who bought into Australia's biggest department store operator in March, is a formidable enemy with a track record of corporate raiding.
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The veteran fashion retailer fuelled takeover speculation last month by requesting a list of Myer's owners, although on Tuesday his firm said it had no current plans to make an offer.
Instead, Lew launched an attack on Myer's board, vowed to oppose the appointment of Garry Hounsell as Myer chairman at next month's shareholder meeting, and said its two-year-old "New Myer" revitalisation plan had achieved nothing.
"Our greatest criticism of Myer is the lack of mass-merchandise retail experience on the board ... how can they add any value to discussions about strategy?" he wrote.
"Its stores ... are disorderly" and its clearance floors were "one of the worst experiences I have had in more than 50 years in retail."
Myer later issued a statement rejecting Lew's criticism as "disappointing but unsurprising," and said it remained focused on its turnaround strategy which includes store closures.
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Lew used a 10 percent stake in Coles Myer, a former owner of Myer, to obtain a seat on its board in 1985, where he stayed until his ouster as chairman in 2002.
In 2014, he extracted a premium for his long-held slice of Country Road fashion chain from South Africa's Woolworths, and since March he has built up his stake in Myer despite its failure to transition to the digital marketplace.
He said he was "bitterly disappointed" in the Myer board's efforts to turn the A$613 million ($479.30 million) company around, with sales sliding steadily since it launched the renewal plan in 2015.
Myer had rejected his request for three board seats and had rebuffed his attempts to engage the board on strategy, proving it was "out of touch" and "arrogant", he said. The retailer said Lew's nominees had been rejected on conflict-of-interest grounds.
Myer shares rose 0.3 percent in afternoon trade, while the broader market was flat. Premier shares rose 1 percent.
But with the stock near an all-time low, traders did not rule out a takeover bid in the future. The shares have never broken above their 2009 issue price of A$4.10.
"History shows you he is willing to wait," Blue Ocean Equities strategist Mathan Somasundaram said, referring to a possible takeover from Lew.
($1 = 1.2789 Australian dollars)
(Additional reporting by Byron Kaye; Editing by Stephen Coates)
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