Myer Holdings Ltd (ASX) shares fell sharply after the retailer warned that a volatile second half and a material downturn in consumer sentiment had weighed on sales and margins ahead of its FY26 results.
The department store group said total sales, including concessions, reached A$4.09 billion, up 11.3% on an actual basis following the inclusion of a full year of earnings from Myer Apparel Brands.
However, pro forma total sales increased just 0.3%, reflecting subdued discretionary spending and weaker demand across parts of the group’s portfolio.
Myer shares were down about 8% to A$0.23 following the update and have fallen more than 48% since the beginning of the year.
Consumer weakness hits second-half trading
Executive chair Olivia Wirth said the second half of FY26 had been characterised by “a volatile and significantly more challenging macroeconomic and retail environment”.
Trading was particularly weak during June and July, when deteriorating consumer confidence translated into softer discretionary spending.
Wirth said households had faced sustained cost-of-living pressure from higher fuel prices linked to the Middle East conflict, three interest rate increases during calendar 2026, slower income growth, weakness in the housing market and broader financial uncertainty.
“These pressures have included the inflationary effects of higher fuel prices arising from the Middle East conflict, three interest rate increases in CY26, slower household income growth, a weaker housing market and financial uncertainties for many households,” she said.
Promotional activity weighs on margins
Myer increased promotional activity during the second half in an effort to stimulate demand, contributing to pressure on operating gross profit.
The retailer expects operating gross profit of between A$1.60 billion and A$1.61 billion, representing growth of 13.8% to 14.3% on an actual basis.
On a pro forma basis, however, operating gross profit is expected to decline by between 2.1% and 2.5%, reflecting higher-than-planned discounting and promotional activity.
Myer said its cost-of-doing-business ratio remained broadly in line with its FY26 target of about 29%, despite total sales coming in below expectations.
Initiatives focused on value creation and integration synergies supported performance but were not sufficient to offset weaker underlying consumer demand.
Mixed performance across retail brands
Group comparable sales increased 0.7%, while Myer Retail total sales were also up 0.7%.
Myer Apparel Brands recorded a 1.3% decline in pro forma total sales.
Stronger performances across homewares, womenswear, childrenswear and Just Jeans were offset by weaker sales in beauty and Portmans.
Myer’s FY25 actual results included 12 months of Myer Retail and six months of Myer Apparel Brands, which comprises Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E.
The FY26 result, scheduled for release in September, will include a full 12 months of ownership of the former Premier Investments brands.
Profit result and impairments under review
Myer is finalising its full-year profit result, including the assessment and measurement of any impairments and other significant items.
The update has raised concerns that the group’s final FY26 profit could fall below previous market expectations as promotional spending, soft sales and weak consumer sentiment continue to pressure earnings.