Myer reveals poor trading update ahead of Olivia Wirth’s first investor strategy day

Just days out from Myer executive chair Olivia Wirth’s much-awaited strategy day with investors, the retailer has revealed poor trading figures and a list of ills now hitting the retailer.

Myer executive chair Olivia Wirth in their Bourke Street store. Picture: Aaron Francis / The Australian

Myer has revealed flat sales for its department store as well as shrinking revenue for its recently acquired portfolio of apparel brands it bought from billionaire Solomon Lew.

It casts a pall over the retailer only a week out from its maiden strategy day presentation to be led by recently appointed executive chair Olivia Wirth.

Weaker trading conditions for the fashion and apparel sectors were also compounded by subdued activity before the lead up to the federal election in May, Myer explained, while margins were being pinched by rising costs such as wages and adverse currency movements.

The retailer has also detailed ongoing operational issues at its national distribution centre which in the first half wiped off around $12m in earnings and which still doesn’t have a permanent solution to its ills.

In a trading update to the market on Friday Myer said its performance for the first 16 weeks of the second half was impacted by a number of “market-wide and company specific factors” including slimmer margins from increased competition and promotions, rising costs of doing business - in particular wages - and unfavourable movements in foreign exchange.

But this cohort of factors denting trading seems to have hurt its apparel brands - Just Jeans, Portmans, Dotti, Jacqui E and Jay Jays - more than its flagship department stores. The apparel brands were only earlier this year bought from Mr Lew’s Premier Investments in return for shares in Myer, which made Mr Lew the retailer’s single largest shareholder.

Solomon Lew is the largest shareholder in Myer after selling his apparel brands business to the department store owner. Picture: Nicki Connolly

Now as Myer begins its new incarnation as a department store that also owns more than 700 standalone stores it is facing tougher trading conditions across its businesses. The company said on Friday that total sales for department store Myer rose 1.9 per cent to $837.2m for the second half of the financial year to date, with same-store sales up 1.5 per cent. Online sales rose 9 per cent.

However, at its apparel brands arm total sales fell 3.9 per cent to $211.2m while comparable sales were down 3.7 per cent. Online sales for the 16 week period fell 3.5 per cent.

“Myer Group’s second half year-to-date financial performance has been impacted by a number of market-wide and company-specific factors. These include margin pressure from heightened promotional activity observed across the broader retail sector, increased costs of doing business (in particular store wages and occupancy outgoing costs impacted by inflation, as well as investment in additional leadership capabilities) and unfavourable foreign exchange movements,” Myer said in an ASX statement.

Ms Wirth said despite challenging trading conditions that were compounded by a subdued retail environment in the lead-up to the May federal election, Myer did report growth in its year-to-date sales. “Consumers remain cautious and focused on value in response to cost-of-living pressures and the current macroeconomic headwinds and uncertainty. This has resulted in volatile trading conditions with widespread promotional activity across the retail sector,” she said on Friday.

Myer has blamed poor trading on rising promotions and competition in the sector, the federal election and cautious consumers. Picture: Gaye Gerard

“We remain focused on resetting the business and implementing our strategic growth plan to position Myer Group as an omni-channel retail platform capable of delivering growth during all phases of the economic cycle. “While recognising fiscal 2025 is a year of transition for Myer Group, we have taken steps to strengthen our leadership team and are making good progress in implementing our strategy.

“We are embedding Apparel Brands into the Myer Group, strengthening our balance sheet by successfully refinancing, commenced a restructure of sass & bide, Marcs and David Lawrence and have implemented an interim solution for the next peak trading period to address the challenges we faced at our new National Distribution Centre in the first half.”

It comes as next Wednesday Ms Wirth, the former loyalty boss at Qantas, will present to investors and analysts her much-awaited strategy day where she will further detail the retailer’s strategy and growth plans and where investors will also be looking for updates on the integration of the apparel brands acquired from Mr Lew.

Ms Wirth will likely face more questions on the sagging performance of the apparel brands - a deal which she championed as executive chair and that was paid for in $900m in Myer shares.

Meanwhile, Myer has also been forced to adopt an interim measure to fix operational problems at its national distribution centre - as it scrambles to forge a permanent fix to the problem - and that has already cost it around $12m in lost earnings in the first half of 2025. These complications at the centre resulted in an estimated impact on the first-half performance that included stock unavailability ($7m), dual sites costs ($3m) and online fulfilment costs ($2m).

Myer said on Friday it had developed an interim solution to navigate the next peak trading period including the introduction of a new third-party logistics operation, with Toll supporting the business from June 2025. It said the distribution centre was now handling 10-15 per cent of online fulfilment, further reducing strain on stores.

Originally published as Myer reveals poor trading update ahead of Olivia Wirth’s first investor strategy day