Myer slumps to heavy loss on Apparel Brands union

Myer’s marriage to Solomon Lew’s Apparel Brands and subdued consumer demand has weighed heavily on the department store chain’s full-year profit.

The retailer on Tuesday reported a statutory loss of $211.2 million after booking a one-off impairment of $213.3m attributed to acquisition accounting.

The Apparel Brands portfolio — which includes shopping mall mainstays Just Jeans, Jay Jays, Dotti, Jacqui E and Portmans — was picked up from Mr Lew’s Premier Investments in late 2024 under a deal worth almost $900m.

Myer said its full-year accounts were also impacted by a further $34.7m relating to other significant items, “reflecting a period of significant transition and merger integration”.

Investors took the news hard, with shares diving almost 22 per cent in the first hour of trade to 50¢.

Excluding those one-off items, net profit was $36.8m — down 30 per cent from the previous year’s $52.6m.

Total sales growth was up just 0.5 per cent on a pro forma basis — including 12 months for Myer and 12 months for Apparel Brands.

Revenue was up 12.5 per cent to $3.67 billion. But costs of doing business topped just over $1b — up almost 23 per cent on a year earlier.

But sales in the second half improved 1.7 per cent — the first period as Myer Group that reflected a six-month contribution from Apparel Brands.

Myer pinned the hefty impairment costs of incorporating Apparel Brands to accounting measures that required the purchase consideration to be valued using its closing share price at the acquisition date. Myer’s share price at the time of transaction completion was 98.5¢ compared to 64.5¢ at the time of announcing the proposed transaction last June.

Myer said sales proved resilient but profitability was impacted by soft macroeconomic conditions, reflected in subdued consumer demand and increased promotional activity to shift inventory amid a continued challenging environment for bricks-and-mortar retailers.

Earnings before interest and tax slumped 13.8 per cent, which Myer said reflected the inclusion of Apparel Brands more than offset by challenged retail conditions which impacted profitability and increased costs of doing business.

But in positive signs for the group, sales in the first seven weeks of the new financial year were up 3.1 per cent. But it warned target initiatives would be needed to offset ongoing cost of doing business “headwinds”.

Myer executive chair Olivia Wirth said FY25 had been a “reset” year for the group to target long-term growth

“Despite challenging macroeconomic conditions and tough retail markets in Australia and New Zealand, we achieved positive sales growth in our first period as a combined group,” Ms Wirth said.

“We are making significant progress in executing our strategy for the Myer Group, building a diversified omni-channel retail powerhouse to drive growth and deliver sustainable returns for shareholders.

“There is real momentum building across the business thanks to the energy, strong engagement, and focus of dedicated team members in implementing important changes while achieving high customer satisfaction.”

Ms Wirth said 26 per cent of sales were now derived from Apparel Brands.

No final dividend was declared.