Myer'S Struggle: 136 Jacaranda Key Concepts in VCE Business Management Units 1 & 2 Fifth Edition

company. There is also greater public scrutiny of public companies.
Because public listed companies are

partially owned by the public, they are obliged to disclose corporate financial information. They must also
observe stringent compliance rules.
On the other hand, a public listed company can access more funds by issuing shares to the public.
A private limited company can only have a minimum of 1 and up to a maximum of 50 shareholders who
are not employees of the company. A private limited company may only offer shares to shareholders of the
company or employees/subsidiaries of the company. This limits the amount of capital the company will have
access to, and therefore also limits the growth potential of the business.
MYER’S STRUGGLE
Myer is Australia’s largest and perhaps its
best-known department store group. Today, Over the course of its history, Myer has alternated
Myer has more than 60 stores across Aus- between being a private limited company and a public
tralia, employs 12 500 staff and has 50 000 listed company.
shareholders. Myer’s merchandise includes
womenswear; menswear; Miss Shop (Youth);
childrenswear; intimate apparel; beauty, fra-
grance and cosmetics; homewares; electrical
goods; toys; footwear, handbags and acces-
sories; and general merchandise. The busi-
ness has fluctuated between being a private
limited company and a public listed company.
Sidney Myer and his elder brother opened
the first Myer store in Bendigo in 1900. A few
years later, Sidney established a department
store that later became the Myer Emporium in
Bourke St, Melbourne. This store is still trad-
ing and is considered to be the flagship in the
Myer department store chain.
Growth of the business

The Myer business grew, and in 1925 Myer Emporium Ltd was incorporated and listed on the Melbourne Stock
Exchange. The business continued to expand. Myer led the way in the development of regional shopping centres,
including Chadstone Shopping Centre. Following a number of acquisitions, Myer merged with Coles in 1985
and became Coles Myer Limited — Australia’s largest retailer at the time and one of the largest in the world.
Following a period during which Myer department stores under-performed, Coles Myer sold Myer to a consortium
(a group of individuals or businesses that pool finances to achieve a common goal) led by US private equity group
Newbridge Capital, part of the Texas Pacific Group. The consortium included members of the Myer family, who
retained a 5 per cent stake in the company. Myer was therefore de-listed from the Australian Securities Exchange
(ASX) and became a private limited company (Myer Pty Ltd).
Myer stores returned to profitability. In 2009, Myer announced that it would be floating the business on the
sharemarket; it was listed on the ASX in November that year. The final issue price was $4.10, and Myer’s market
capitalisation (the total value of its shares) was approximately $2.4 billion. Once again, Myer had become a
public listed company.
Myer implemented a turnaround plan in 2015 for the company following a decline in net profit. The plan, known
as ‘New Myer’, involved online ordering and ‘click and collect’ hubs in stores, the removal of a large number of
brands to make way for new brands, a greater focus on ‘high value’ customers wanting to stay up to date with
fashion and job cuts. Following implementation of the turnaround plan, there was some improvement in Myer’s
financial performance. However, in late 2017, Myer announced that sales had continued to fall, sales revenue
had fallen and that its full-year profit was only $11.9 million (80 per cent less than the previous year’s profit).
Myer’s share price reached a historic low of 34.5 cents in April 2018.
136 Jacaranda Key Concepts in VCE Business Management Units 1 & 2 Fifth Edition
THE GROWTH OF JB HI-FI
JB Hi-Fi is a popular Australian-based
electronics and home goods retailer. JB Hi-Fi became a public listed company after it floated on
John Barbuto established the business the ASX in 2003.
as a single store in Keilor East in 1974.
His vision was to deliver a specialist
range of Hi-Fi and recorded music to
customers at the lowest prices.
Barbuto sold the business in 1983;
by 1999 the new owners had expanded
JB Hi-Fi by opening another nine stores
in Melbourne and Sydney. In July
2000, the majority of JB Hi-Fi was sold
to private equity bankers and senior
management. Their plan was to grow the
business throughout Australia.
In October 2003, JB Hi-Fi was floated
on the ASX, thereby becoming a public
listed company. Its shares listed at
$2.20. The chairman at the time, Patrick
Elliott, said that while it was pleasing to
see JB Hi-Fi trading strongly, the company was focused on ensuring its core business remained strong, so that
its stores would continue to trade well and that new stores could open according to plan.
When it first opened, JB Hi-Fi specialised in Hi-Fi equipment. It has diversified to focus on consumer elec-
tronics, including televisions, audio/visual, digital camera photography, portable audio and in-car entertainment,
software (including music, games and movies), whitegoods and appliances. In 2016, JB Hi-Fi took over one of
its competitors, The Good Guys. The acquisition accelerated the company’s plans to grow by building market
share in the whitegoods, kitchenware and general home appliances sectors. The business now has more than
400 stores across Australia and New Zealand, including more than 300 JB Hi-Fi stores and more than 100 The
Good Guys stores. The business employs more than 11 000 staff.
In 2016, JB Hi-Fi’s share price reached a historic high of $31.20. In 2017, JB Hi-Fi announced a record full-year
profit of $172 million (13 per cent higher than the previous year’s profit).
RIP CURL STAYS PRIVATE

Rip Curl has always resisted the
temptation to become a public listed Rip Curl has chosen to remain a private limited company.
company. Doug ‘Claw’ Warbrick and
Brian ‘Sing Ding’ Singer founded the
business in 1969 when they began
manufacturing surfboards in a garage
in the coastal town of Torquay. Rip Curl
has grown to become one of the largest
designers, manufacturers, and retailers
of board wear in Australia, New Zealand,
Europe, North and South America, and
South Africa. Rip Curl employs more
than 2000 people.
Rip Curl’s global head office is still
located in Torquay. The business also
continues to be controlled by its
founders, who jointly own 72 per cent of
the company. Despite moments when
CHAPTER 3 Planning a business — internal environment 137

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company. There is also greater public scrutiny of public companies.

Because public listed companies are

Growth of the business

RIP CURL STAYS PRIVATE

CHAPTER 3 Planning a business — internal environment 137

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