‘We’ve only just reset’: Myer’s appeal to youth flounders as profits sink

1 hour ago 1

Myer chief executive Olivia Wirth is yet to convince customers and investors that the ailing department store chain can turn the corner and attract younger shoppers, after it struggled to lift sales and its profits slid backwards during the 2024-25 financial year.

Wirth, who on Tuesday delivered her first full set of results since becoming chief executive and executive chair in June last year, sought to cushion weak sales growth by saying it had been a transition year for the business as its $950 million acquisition of Jay Jays, Just Jeans, Dotti, Portmans and Jacqui E largely failed to bear fruit.

“We’ve only just reset our new strategy, and there was a lot of change throughout the year in order to make sure that we can really focus on the growth strategy,” Wirth said. “The Apparel Brands integration is going well.”

Sales grew just 0.5 per cent to nearly $3.7 billion over 12 months to the end of July. The second half had stronger sales uplift of 1.7 per cent, reflecting the additional contribution of the five recently acquired Apparel Brands.

But only one of the five brands, Portmans, increased sales during the year (1.3 per cent). Trend-driven youth fashion brand Dotti performed particularly badly, with an unpopular winter range sending sales down 8.9 per cent.

Investors have signalled their displeasure with Myer’s performance by sending its share price tumbling 26 per cent lower to 47.5¢. The $818 million company did not declare a final dividend.

Myer’s homewares department has carried the business, increasing sales by 7.4 per cent in what Wirth told investors was the division’s best result since 2009. Beauty, another department earmarked for growth, ticked 0.8 per cent higher.

Myer will add 18 new clothing brands and 38 new beauty brands between now and Christmas. “That includes a number of K-beauty brands and also Gen Z skincare brands,” Wirth said.

“We’ve already seen Sportscraft and Jag come in. There’s a few younger brands, like 4th & Reckless, Lioness is another … it’s across the board.”

Myer axed eight of its 13 exclusive brands and is relaunching in February five core brands that will have a “significant focus on denim”. Its unprofitable exclusively owned brands, sass & bide, David Lawrence and Marcs, were absorbed into the group, resulting in some redundancies across support office functions like marketing and human resources. Online sales across the group increased 15 per cent.

The fight for loyalty

Loyalty programs are becoming an increasingly important frontier for retailers as competition with local and global retailers intensifies.

House-owned or exclusive brands, which are usually higher margin, now represent 26 per cent of Myer’s total sales thanks to the integration of Apparel Brands. One of Wirth’s key reasons for the acquisition was to integrate the five labels into Myer One, its loyalty program. Apparel Brands was integrated in August, and over the year, Myer increased active customers by 6.9 per cent to a record 4.7 million members.

E-commerThe Iconic this week announced its new loyalty program, which comes after 14 years of operation, and is designed with direct input from more than 30,000 customers.

On Monday, Myer and Virgin Australia matched rival David Jones’ tie-up with Qantas, a revamped loyalty program that will let fashion customers bank Qantas frequent flyer points. Wirth is a former boss of Qantas’ loyalty business.

“My view is Myer One’s running its own race here. We’ve been in this game for 20 years,” the executive chair said. Myer One will be relaunched in October, said Wirth, who provided a glimpse into how she intended to fuel the rewards program.

“The tiers are really important to make sure that we have strive in the program. That means that customers have a clear ambition to be a gold or a platinum level within the program, and we’ve done a lot of research to understand what the customer pain points are,” she said. “We’re continuing to invest, it’s going to get stronger, and we hope that our customers love the changes that we’re about to bring in.”

However, a robot warehouse logistics bungle – a problem that is now a year old – has cost the business $16 million in lost earnings for the 2025 fiscal year after the automated warehouse ran into implementation issues that trapped clothes and prevented stock from reaching stores in the lead-up to last year’s crucial Christmas trading period. A further $32 million has been carved out for a long-term solution, which will come online mid next year.

“We know what the problem is, we’ve got a fix. The fix is under way, and it will be operational, including Apparel Brands from July next year,” said Wirth.

Myer was able to rein in retail theft, which has been a persistent issue for retailers, especially in Victoria: “shrinkage expenses” fell 20 per cent following investment in body cameras, additional CCTV and security guards. Thieves still managed to steal about $51.4 million worth of Myer stock in 2024-25, representing 1.4 per cent of total sales, down from 1.7 per cent the previous year.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.