Retail giant Myer has reported a sharp decline in profit for the first half of the financial year, with earnings impacted by acquisition-related costs and operational disruptions at its distribution centre.
Weighed down
Net profit after tax fell 39.7% year-on-year to $30.4 million, weighed down by some $14 million in expenses linked to the acquisition of Premier Investments’ Apparel Brands division, which includes Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E.
Additionally, $2.5 million was allocated for a strategic business review.
Despite these challenges, total sales for the half-year were relatively stable, rising 0.1%.
However, early indications for the second half suggest a softer retail environment, with sales in the first five weeks down 2.6% compared to the previous year.
The company faced logistical issues following the launch of its new national distribution centre in Victoria in August.
The facility has yet to reach full operational efficiency, creating stock flow disruptions that resulted in a $12 million earnings impact.
Stock delays
Myer Exclusive Brand (MEB) inventory was particularly affected, with stock remaining held up within the facility in the first quarter of FY25.
To mitigate delays, the company shifted online order fulfilment to its retail stores, increasing costs and reducing efficiency.
Despite these hurdles, Myer reported strong trading during key periods, including Black Friday and Christmas, but remains cautious about the broader retail outlook.
The company is focused on resolving its distribution challenges and improving efficiency as it moves into the second half of the financial year.