Myer Reports 40% Profit Decline Despite Steady Revenue, Blames Spending Slowdown And Logistics Issues

Department store giant Myer has reported a sharp drop in half-year profits as it recorded a net profit of AU$30 million for the six months ending Dec. 31, marking a 40% decrease compared to the previous period.

Myer faces profit decline

Myer has attributed the decline to cautious consumer spending and challenges in its business restructuring. Despite this, total revenue remained steady at AU$1.83 billion, News AU reported.

The store mentioned difficult economic conditions and operational issues at its new Ravenhall National Distribution Centre in Victoria as key factors behind the profit decline.

"The NDC went live in August 2024, however, the site has experienced implementation issues and is not yet operating as designed," Myer said. "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 fulfillment transferring to stores."

Myer further reported that costs and inefficiencies from the rollout of its new distribution center (NDC) reduced earnings by approximately AU$12 million. A detailed review identified automation and integration issues, and the company is now working on solutions.

Myer braces for further impact

The company expects the NDC challenges to affect its financial performance in the second half of the year. Additionally, sales for the first five weeks of 2025 dropped by 2.6% compared to the same period last year.

Despite an initial 4% drop in its share price at the market's opening on Wednesday, Myer saw a slight recovery, rising 0.66% by 11:30 AM.

The profit decline comes as Myer restructures its business following the acquisition of Apparel Brands from Solomon Lew's Premier Investments, giving it control over brands like Jay Jays, Just Jeans, Portmans, Dotti, and Jacqui E.

Resilience amid challenges

Myer's executive chair, Olivia Wirth, said that the company was focused on restructuring and strengthening its position as a major retail player.

Wirth noted that despite economic challenges and issues at its NDC, Myer performed well during key shopping periods like Black Friday and Christmas. While consumer spending remains cautious, the company saw growth in both comparable and online sales.

Its Myer One loyalty program also reached a record 4.6 million active members with a 79% engagement rate. During this transition year, Myer remains committed to its strategic plans to drive growth and increase returns for shareholders.

The company also secured a AU$150 million debt refinancing agreement with Commonwealth Bank and NAB, which was expected to save AU$3 million in the second half of 2025 and AU$11 million annually moving forward, improving financial stability, as per Wirth. So far this year, Myer's stock has dropped by 38%.