Lew’s Myer investment is finally in the black but has he missed the takeover boat?

Even if Lew hasn’t the appetite for a Myer takeover, his stake has given him gatekeeper status if anyone else wants to have a try.

It is more likely that Lew will use the window that the Corporations Act allows for shareholders with more than 20 per cent of a listed company to ‘creep’ by buying three per cent every six months without having to lob a formal takeover offer.

If he takes that opportunity his stake would increase to nearly 26 per cent – a point at which it would be difficult for the Myer board to move without his approval.

Lew increasing his stake in Myer would also cement the view that the billionaire will continue to seek control of Myer without making an offer.

Lew will be happy that his investment in Myer has moved into profit, but the department store’s strong performance raises other uncomfortable truths for Lew.

Despite his dogged criticism of Myer’s strategy, its results over the past year suggest that the changes instituted by its chief executive John King have found traction. The company now says its sales for the five months to December 31, 2022 were its best since 2004.

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Its net profit for the half year to the end of January this year should be up between 89 per cent and 104 per cent, the company said in its Tuesday update.

This may cause for pause for thought from those shareholders that supported Lew’s claims for several years that the Myer board should be sacked. (Although, more recently he has thrown his support behind King.)

After years of acrimony between Lew and the Myer board the retail billionaire has only managed to secure one representative director – veteran retailer and long-time Lew lieutenant, Terry McCartney.

It’s also a fair bet that Lew would still argue that the Myer turnaround could have been achieved more speedily had choice of directors been around the board table.

And while Myer’s performance should be acknowledged, a number of other retail groups including JB Hi-Fi and Super Retail Group (owner of Supercheap Auto and Rebel Sport) have also pointed to a strong six months for sales revenue – as consumers shrugged off higher interest rates and inflation and headed to the shops.

Retail analysts, although surprised by the strength of Myer’s trading update, remain wary of what is ahead. They are waiting for consumer spending to hit a brick wall later this year as the full effect of higher interest rates hit.

King also acknowledged that the future is uncertain.

“As with most retailers, we remain cautious on the macroeconomic environment for the remainder of the calendar year but are equally confident in the continuing momentum we have within the Customer First Plan and a range of initiatives we are executing,” he said.