Myer CEO Olivia Wirth doubles down on profit-sinking exclusive fashion labels

Myer will double down and invest in its languishing sass & bide, Marcs and David Lawrence brands that drove profits 26 per cent lower as it seeks to extract better margins from exclusive brands and drum up stronger customer loyalty.

New chief executive Olivia Wirth, the former Qantas loyalty boss, on Friday unveiled her first set of Myer full-year results, which showed that total sales declined by 2.9 per cent and signalled a more hands-on approach with those brands.

Myer shares tumbled after chief executive Olivia Wirth released the company’s full-year results. Credit: Dominic Lorrimer

“They have been managed at arm’s-length, and it’s an opportunity for us to rethink and restructure the way these businesses are run,” Wirth told this masthead.

Myer will close 10 of sass & bide’s 14 standalone stores and establish concession stores for the brand within eight Myer stores. The stores that will close include Bondi, Miranda, Canberra, Chadstone, Doncaster, Emporium, Rundle Street, Karrinyup, Paddington, and Newmarket in New Zealand. Remaining open are the Claremont, James Street, South Wharf and Harbour Town stores.

“Private label isn’t only about having the exclusivity from a customer perspective and giving them a reason to shop at Myer; importantly, it also delivers greater value for us, greater margins, which is important from a shareholder perspective,” Wirth told investors on Friday morning. “These are high-margin generators, and it is important to optimise the sales contributions of these brands to create bottom-line profit growth.”

Investors were unimpressed with the department chain’s full-year figures and update, sending its share price tumbling more than 11 per cent in the morning before paring back. Myer shares closed 0.6 per cent lower.

Myer also intends to chase younger, more fashion-conscious customers, who are less driven by discounting, and to sharpen promotions to make them more relevant to the customer.

“We’re possibly, potentially underweight at the moment in an offering for a younger demographic in relation to apparel. I wouldn’t say the same for beauty,” Wirth said. “We do have a very loyal customer. Our opportunity here is to really stretch this out into slightly younger but also more fashion-focused customers.”

Sass & bide’s Bondi boutique is one of the stores that will be closing down. Credit: Dominic Lorrimer

Myer is also undertaking due diligence to explore a potential merger with five youth and womenswear brands currently owned and operated by retail billionaire Solomon Lew’s Premier Investments. Just Jeans, Jay Jays, Portmans, Jacqui E, and Dotti sales were collectively down 8.1 per cent for the first half of the 2024 financial year.

Wirth intends to use those brands to expand Myer’s loyalty program and fold a new generation of shoppers into the department chain’s ecosystem at a younger age.

“It really is about scale,” she said. “Think about the customer base of those five brands; you add that to the existing customer base, that gives us a great new, broader customer base, and then, importantly, it also provides a larger and more diversified shareholder base.”

Myer’s sales were flat for the 2024 financial year as Australian shoppers continued to pare back their discretionary spending.

Profits have declined to $52.6 million, down from $71.1 million the year before, with about half of the slide due to the underperformance of sass & bide, Marcs and David Lawrence, which the department store was looking to sell before Wirth chose to keep them.

Group comparable sales ticked up just 0.4 per cent for the year, with total sales declining 2.9 per cent to just under $3.3 million, as store closures in Brisbane, Frankston, and Werribee affected sales.

Despite the lower sales figures, Myer has been recruiting and retaining customers: loyalty program Myer One had a 4.8 per cent rise in active members to 4.4 million, with 706,000 new members joining in the 2024 financial year. More than half of these were under 35. Deepening loyalty helps the department chain gather more data on customer preferences and generates more targeted offerings and rewards.

Shoppers also turned online to make purchases, pushing Myer’s online sales 2 per cent higher to $704 million. More than one in five (21.6 per cent) of items purchased from Myer are sold online.

Wirth also intends to encourage walk-in shoppers to also shop online. Two thirds (65 per cent) of Myer’s sales come from in-store-only customers. “There’s significant leverage if we can grow our omnichannel customer base.”

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