Myer Holdings Ltd has reported a sharp decline in half-year profits, attributing the downturn to subdued consumer spending and issues arising from its business transformation.
For the six months ending December 31, 2024, Myer posted a net profit of A$30 million, representing a 40% drop from the previous corresponding period. While total revenue remained steady at A$1.83 billion, operational challenges weighed on the bottom line.
The company cited a "tough macro environment" and setbacks at its newly established Ravenhall National Distribution Centre (NDC) in Victoria as key factors behind the earnings decline.
“The NDC went live in August 2024, however, the site has experienced implementation issues and is not yet operating as designed,” Myer stated on Wednesday.
“During H125, Myer flagged implementation issues and delayed ramp-up.
“The complications created stock flow issues, including Myer Exclusive Brand stock remaining trapped in the facility during Q1 FY25 and led to online fulfilment transferring to stores.”
The company estimated that inefficiencies and additional costs stemming from the NDC rollout had impacted earnings by approximately A$12 million.
“A comprehensive diagnostic review confirmed automation and integration issues, with remediation action plans currently being developed,” the company said.
The retailer warned that the NDC would continue to affect its financial performance in the second half of the fiscal year. It also noted that sales for the first five weeks of 2025 had fallen by 2.6% compared to the same period last year.
Business restructure reason for setback
The financial setback comes amid a business restructure following the acquisition of Apparel Brands from Solomon Lew’s Premier Investments, which has brought brands such as Jay Jays, Just Jeans, Portmans, Dotti, and Jacqui E under Myer’s control. The newly formed Myer Group now operates over 750 department and specialty stores across Australia and New Zealand.
The company confirmed that consolidated financials for Myer Group would be reported in the second half of FY25.
Online sales increase
Amid the challenges, Myer reported some positive developments, including a 4.8% increase in online sales to A$409 million, which accounted for 22.3% of total sales. Additionally, its Myer One loyalty program grew to 4.6 million active members, reflecting a 6% year-on-year rise, with 453,000 new customers joining the program.
Executive chair Olivia Wirth reaffirmed the company’s commitment to repositioning Myer Group as a dominant force in retail.
“Despite challenging trading conditions in a tough macro environment and complications experienced at our national distribution centre, Myer traded well throughout the all-important Black Friday and Christmas trading periods,” she said.
“While consumers remain cautious, we reported growth in our comparable and online sales and I’m pleased to report our Myer One loyalty program delivered a record performance with 4.6 million active members and a 79% tag rate.
“In a year of transition, we remain focused on executing our strategic plans to drive growth and attractive shareholder returns.”
The company also announced a refinancing arrangement, securing commitments for a A$150 million debt facility with Commonwealth Bank and NAB.
“The refinancing is expected to deliver saving of A$3 million in 2H25 and annual savings thereafter of A$11 million and enhanced liquidity,” the company said.
Year-to-date, Myer’s share price has fallen by 38%.
Shares ar ere down to day to 72 cents.