Myer’s Profits Slide Amid Distribution Woes and Weak Retail Conditions

Australian department store giant Myer posted a sharp decline in interim earnings, citing logistical challenges at its new distribution centre in Victoria and costs from a strategic review. The retailer also warned of a gloomy outlook due to sluggish economic conditions.

Myer, which recently completed its acquisition of apparel brands from Premier Investments, reported a 2.6% drop in sales for the first five weeks of the second half of the fiscal year. Shares in Sydney plunged 10.5% to A$0.68, the lowest since June 2024.

For the 26 weeks ending January 25, Myer recorded total sales of A$1.83 billion ($1.16 billion), with comparable sales barely rising by 1%. Net profit after tax fell 18.5% year-over-year to A$42.4 million, reflecting the impact of store closures in Brisbane and Werribee.

The company’s national distribution centre, operational since August 2024, has faced ongoing issues, hindering efficiency. Myer flagged that the site is still not functioning as intended, raising concerns among investors. "Shareholders deserve clarity on these ‘operational issues,’ whether they relate to warehousing, technology, or infrastructure," noted Jesse Moors of Spatium Capital.

Retail conditions remain tough, with Myer previously warning of weak sales during major shopping periods, including Black Friday, Christmas, and Boxing Day. Broader Australian business activity also hit pandemic-era lows in November due to challenging conditions in manufacturing and retail.

KCM Trade analyst Tim Waterer emphasized that Myer’s profitability hinges on an improved retail landscape. "The company needs stronger market conditions for its profits to rebound," he said.

As Myer navigates these challenges, investors will be watching closely for signs of recovery in both logistics and consumer demand.