By Campbell Kwan and Joanne Tran
Myer’s botched rollout of its national distribution centre will cost $32 million more to fix and will not be ready for the peak-Christmas trading period, which caused a heavy sell-off in the company’s shares after it reported a disappointing annual result.
The department store group, led by executive chairwoman Olivia Wirth, reported that net profit slumped 30 per cent to $36.8 million for the year to July 26. The problems with its new distribution centre as well as poor sales from its Apparel Brands portfolio, which it acquired from billionaire Solomon Lew in January, weighed on earnings.
Pro forma sales – adjusted for the apparel brands acquisition – rose just 0.5 per cent to $3.7 billion.
Myer’s shares fell as much as 29 per cent to 45 cents, the lowest level in more than three years, before closing at 48¢ on Tuesday. Lew, who owns 27 per cent of Myer, lost about $80 million in Tuesday’s rout.
“Myer’s share price fell from the disappointments around some of the outlook commentary in terms of the national distribution centre. They’ve obviously had some issues there,” said Wilson Asset Management deputy portfolio manager Shaun Weick.
“The cost of doing business is going to remain a bit more elevated than the expectations leading into FY26. The trading in Apparel Brands too, is probably disappointing in terms of the update they gave for the current trading. The market’s viewing it as a transition year.”
Wirth, who joined the retailer’s board in 2023 and became its executive chairwoman last year after running Qantas’ highly profitable loyalty division, said the 2025 financial year had been one of transition, in which the company had positioned itself for longer-term growth.
She said the $1.1 billion acquisition of Just Jeans, Portmans, Dotti, Jay Jays and Jacqui E, collectively known as Apparel Brands, from Lew earlier this year would transform the department store into an operator of multiple brands. But so far, those brands had struggled.
On a pro forma basis, Apparel Brands’ sales fell 0.7 per cent during the six months it had been under Myer’s ownership. Just Jeans eked out 1.3 per cent growth in the second half, while Jacqui E was flat. Portmans slipped 0.3 per cent and Dotti suffered an 8.9 per cent decline, reflecting weak winter fashion demand and higher promotional intensity. Jay Jays was flat.
Myer reported a statutory net loss of $211.2 million, compared with a $43.5 million profit a year earlier, largely as a result of the Apparel Brands deal, which saw the company take a large non-cash impairment and book about $35 million in integration and restructuring costs.
Adding to the earnings headwinds were operational challenges in the rollout of Myer’s new national distribution centre in Melbourne that led to a $16 million impact on earnings before interest and tax. The company said it will outsource its logistics and supply chain processes to Toll Transport through the busy Black Friday and Christmas sales periods as it works to get the distribution centre operational.
Myer’s cost of doing business rose by 22.6 per cent, reflecting the inclusion of the Apparel Brands arm, as well as higher store costs, wage increases, and broader inflationary pressures. Wirth said the group was working to better manage cost inflation in the year ahead.
Barrenjoey retail analyst Aryan Norozi said the stock sold off due to the earnings miss, as well as Myer’s rising cost of doing business, which was partly due to the delays in launching its national distribution centre.
The company did report improving momentum so far in the new financial year, however, with group sales in the first seven weeks up 3.1 per cent compared to the same period a year ago. That uptick was driven by Myer retail sales rising 4.3 per cent, while Apparel Brands sales slipped 1.3 per cent.
Wirth said the growth of those brands would take time, and that their integration of the Myer One loyalty program would give the company a better insight into what customers wanted.
“These brands, from the research that we’ve done, are brands that are loved by the Australian public. The opportunity for us is to continue to make them relevant to the customer of today, to invest in the right areas and to make sure that we have an approach which is going to attract new customer segments,” Wirth said.
“The addition of Apparel Brands represents a significant diversification of our sales with 26 per cent of sales now coming from brands owned by Myer Group,” she added.
Myer also said that it had been hit by a surge in theft and violent behaviour, consistent with reports from across the industry that had forced the company to add security to its stores. Incidents of threatening behaviour rose 79 per cent, while antisocial behaviour, which includes aggressive behaviour and physical abuse, increased by 11 per cent.
Myer will not pay a final dividend, bringing the total dividend for the 2025 financial year to 2.5 cents per share, down from 3.5 cents in the previous year.
Licensed by Copyright Agency. You must not copy this work without permission.
