Myer, Premier Investments shares dive on poor Christmas sales and cost of living concerns

Shares in Premier Investments, owner of brands such as Smiggle, Just Jeans, and Portmans, tumbled as much as 14.6 per cent following trading update for the first half of the financial year, which included the all-important pre-Christmas period.

The company highlighted the ongoing impact of challenging retail conditions and cost-of-living pressures across its markets, despite strong Black Friday and Cyber Monday sales providing a temporary lift for the sector.

The sharp market reaction was driven by a downgrade in Premier’s apparel Brands division, which also includes Jay Jays, Peter Alexander, and Dotti.

Earnings from this segment are now forecast to fall by $16 million to $20 million compared to the same period last year. Premier projects total global retail sales of $855 million to $865 million for the 26 weeks ending January 25, 2025, with Australian sales largely flat.

“Retail conditions have remained challenging through 1H25 with customers continuing to experience cost of living pressures across all of Premier Retail’s global markets and having a strong focus on value,” the trading update stated.

Myer Shares Fall Amid Flat Sales and Cost Pressures

Myer’s trading update painted a similarly bleak picture, with its shares plummeting 18 per cent after reporting a 0.8 per cent decline in total sales for the year-to-date period ending December 28, 2024. The drop was attributed to weak consumer sentiment and the temporary closure of its Werribee store, which reopened in late November. Earnings for the period are expected to be $16 million lower than the previous corresponding period.

“Trading during last year’s key sales events including Black Friday was strong, but consumers remain cautious and focused on value given persistent cost-of-living pressures,” Myer CEO Olivia Wirth said.

On a positive note, Myer’s online sales grew 2.8 per cent year-on-year, now accounting for 22 per cent of total sales.

The worse than expected performance follows November retail sales data from the Australian Bureau of Statistics which showed the largest monthly increase in ten months. The ABS found department store sales increased by 1.8 per cent, and clothing and footwear saw a 1.6 per cent rise, as widespread discounting and promotions drove consumer spending.

The rebound in retail sales during November is likely to catch the attention of the Reserve Bank of Australia as it assesses the economy’s readiness for a rate cut. While sales growth remains strong, sustained spending raises questions about whether the inflationary environment has sufficiently stabilised.

Retail resilience, driven by high population growth, low unemployment, and fiscal stimulus such as energy rebates and tax cuts, suggests that consumers may not be as stretched financially as previously thought. However, robust demand risks fuelling inflation, which could delay the RBA’s decision to ease monetary policy.

The data from Myer and Premier’s will be watched by analysts to see if it is a sign of continued consumer weakness, or a failure of trading strategy.