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Coles Myer defers breakup plan
Geoff Hiscock
SYDNEY, Australia (CNN) -- Australian retailing giant Coles Myer has delayed a decision on splitting up the company until at least July 2003. It cited the importance of the coming Christmas trading period. Coles Myer turns over about A$26 billion (about $14 billion) from its Coles supermarkets and department stores such as Myer and Grace Brothers. It also runs Kmart and Target stores under license. Coles Myer was looking to spin off the Target and Myer Grace Bros. operations in the first half of next year, following a review of its structure that has been going on since May. But in a brief announcement to the Australian Stock Exchange late Tuesday, CEO John Fletcher said the Coles Myer board had deferred any consideration of changes to the group's structure until after the end of the 2003 financial year in July next year. Important trading period"The review found that additional shareholder value could potentially be unlocked through alternative structural options," he said. "However, it was agreed that any further consideration of these alternatives needed to be informed by the performance of the non-food brands through the all-important Christmas period and the balance of the 2003 financial year," Fletcher said. The company has been rocked in recent weeks by a bitter boardroom dispute involving its outgoing chairman, Stan Wallis, and a key shareholder and director, Solomon Lew. Wallis, who will likely be replaced as chairman by Rick Allert at a board meeting on Wednesday, is leading the campaign for Lew to step down as a director. Lew, a director since 1985 and a 5 percent shareholder through his Premier Investments, has a range of retail interests and supplier transactions involving Coles Myer. He has been highly critical of the performance of Wallis, and while he is in favor of splitting off the department-store operations, Lew says the timing is not right for a spinoff. Results due ThursdayFletcher, who took over as CEO of the group in September 2001, unveiled a five-year plan in March this year under which he aimed to double profit by mid-2006. The company reports its full-year profit on Thursday. In August, Fletcher indicated that earnings were likely to be at the lower end of A$350 million to A$365 million ($189 million to $197 million). (Full story) Shares in Coles Myer closed Tuesday at A$6.02, up 0.67 percent. That was a little better than the broader market, where the benchmark S&P/ASX200 index put on 0.55 percent. Coles Myer shares hit a one-year high of A$9.00 in February this year, close to their record high of A$9.25 seen in August 1999. But early last month they slipped to A$5.70 as the boardroom tussle became public.
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