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Australia’s legendary retail billionaire, Solomon Lew, is used to getting his way.
No one knows this better than his rivals, like the Myer board which succumbed to his unrelenting multi-year siege and recently bought a bevy of slow-growing clothing brands, such as Just Jeans, from Lew’s Premier Investments group.
Smiggle’s sales have been losing steam and the company remains without a chief executive a year since John Cheston was sacked. Credit: Louie Douvis
The Myer deal left Lew free to focus on the high-growth potential of pyjama brand Peter Alexander, and the planned spin-off of global success story Smiggle into a separately listed group.
If you want to know how that plan is going for Lew, you only needed to listen to this week’s results briefing for Premier Investments.
Lew went off-piste in spectacular fashion, spouting a barrage of fresh allegations related to his sacking of Smiggle boss John Cheston more than a year ago.
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While none of the allegations were directed against Cheston himself, Lew’s spray alleged that the group’s ongoing investigation had uncovered evidence of gambling, inebriation, sexual harassment and bribery.
In his words: “People being out of the office in office hours, returning intoxicated, they’d been out gambling all day … it’s almost a miniseries.”
Maybe next year’s instalment will uncover drug use too, but all we know for sure is that Lew’s vague allegations certainly seemed to wrong-foot his media minders, who were left at a loss to provide any further details.
But let’s provide a little context.
When Cheston was sacked, he was already serving notice after resigning to join Lew’s billionaire rival, Brett Blundy.
Cheston was to run Blundy’s ASX-listed jewellery chain Lovisa, a role that he started in June. And it was the latest win for Blundy, who had also signed up former David Jones boss Mark McInnes after the latter left Lew’s retail empire.
Solomon Lew (left) with John Cheston in 2015. Lew sacked Cheston as Smiggle boss last year.Credit: Palani Mohan
Cheston’s decision to leave in June last year had already derailed the Smiggle spin-off, so his sacking in September of that year was no real loss for Lew. So why is this suddenly an issue, one year after Cheston was dumped and stripped off millions in stock options?
It may have something to do with how sales are holding up for Premier’s two premium brands. While the pyjama game at Peter Alexander is doing well, it may not be a coincidence that Lew is struggling with Smiggle – the business that is meant to be the jewel in Lew’s crown.
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A year since Cheston left, Smiggle remains both leaderless and rudderless with sales dropping last year by double digits “reflecting continued cost-of-living pressures across global markets”, according to Premier.
If Cheston’s departure narrowed the window for a separate public listing of the Smiggle business, competition from the likes of Temu – with its gamified sales platforms and direct-from-the-factory prices – may have now slammed it shut.
While not a direct reflection of Smiggle’s target market, a UBS retail survey in March reported that more than 20 per cent of shoppers plan to buy from Temu this year.
Indeed, Cheston may have seen the writing on the wall and decided junk jewellery was a better bet.
Via his lawyers, Cheston has said this latest Lew “rant” was simply untrue.
“The truth is Mr Cheston declined Premier’s offer to lead a separately listed Smiggle business and instead resigned to accept a CEO role for another publicly-listed retail company. That decision appears to be what Premier is unable to move past,” Cheston’s lawyers said.
“Mr Cheston has moved on, and Premier should do the same.”
We can only assume that Blundy – who controls ASX-listed Lovisia – agrees with this assessment, as the company has displayed zero interest in addressing this issue.
And where does this leave 80-year-old Lew? Patience may yet be a virtue as he looks for the right chief executive to push Smiggle’s global expansion, and hopes that the kids’ stationery group has not missed its moment.
But holding a grudge against Cheston is not going to help Premier Investments one bit.
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