Myer could be on acquisition strategy as it sets up new business for free-standing stores

Myer has set up a new corporate entity as a mechanism for a possible network of free-standing stores, a Myer spokesperson confirmed to SmartCompany.

The new business, FSS Retail, which is understood to stand for Free Standing Stores, was recently set up by the department store giant, as reported by Fairfax.

Fairfax obtained documents showing the new entity was set up 12 days ago.

It is understood that this could see Myer acquire more retail businesses and operate stores outside of its department store network.

FSS Retail has three directors, Myer chief executive Bernie Brookes, Myer chief financial officer Mark Ashby and Myer head of strategic planning Greg Travers, Fairfax reports.

A Myer spokesperson told SmartCompany that it was “created as a formal mechanism” in case the business wished to pursue free-standing stores, but no further details of potential acquisitions could be revealed at this stage.

Myer currently owns the fashion business Sass & Bide, and operates the womenswear brand’s 25 retail stores in Australia and internationally.

The new entity comes amid reported further talks between Myer and David Jones regarding the merger proposal Myer put to its rival in November last year.

It also comes as Myer reappointed  Bernie Brookes for another year as chief executive and managing director, and suggested he would be a good chief executive for a combined business with David Jones.

Retail Doctor Group director Brian Walker toldSmartCompany that a move by Myer to create a network of free-standing retail stores was smart.

He says the department store concept is maturing and the business needs to find new ways to best represent its shareholders.

“Its core business is as a mass-merchandise retailer… it is the house of many brands,” he says. “This is what Myer can do to continue to drive its shareholder’s returns.”

He thought it made sense for the business to develop an equity funding arm, and to have a stake in individual retail brands.

Walker says the move also reflects the impact of international retailers coming to Australia, which is shaking up ownership models as local businesses scale up to achieve profits.

“The way to achieve scale is to consolidate and to acquire,” he says.

“Myer can make more money from its existing operations… or make more acquisitions.”

This article first appeared on SmartCompany.