Solomon Lew’s Apparel Brands boost Myer’s first-half sales, profit

Myer has posted a lift in half-year sales and profit but boss Olivia Wirth expects to see more of the same cautious spending behaviour from shoppers following back-to-back rate hikes and as the Iran war rages on.

Following a record Black Friday and a December/January trading period that was in-line with the prior corresponding period, total group sales grew just 1.7 per cent in the first seven weeks of the second half.

“What we’ve seen over the last 18 months is a cautious consumer. There have been ongoing inflationary pressures, we’ve had consumer spend constrained, discretionary income challenged and consumers have been reacting accordingly,” Ms Wirth told The Nightly on Tuesday.

“From a retailer perspective, promotions are playing a bigger role in your overall mix.

“It’s a continuation of what we’ve seen over the last 18 months and that’s what we’re expecting.”

Amid growing concerns about how the Middle East conflict will affect the global economy, the Reserve Bank of Australia last week lifted interest rates by another 25 basis points, following a February increase, marking the first back-to-back hikes since mid-2023.

On Tuesday, ANZ revealed consumer confidence had plunged to a record low.

“There’s a lot of changes happening at a geopolitical and macro-economic environment and (we’re) yet to see how this plays out in the Australian context,” Ms Wirth said.

“We’ll be very much focused on getting our product mix right, investing in our customer, driving our Myer One engagement program, which becomes increasingly important in a tough environment, and ultimately making sure we have the right promotions in place to drive consumer dollars into Myer.”

Her comments came after Myer revealed it benefited from the ongoing integration of Just Jeans, Portmans, Dotti, Jay Jays and Jacqui E — collectively known as Apparel Brands — bought from Solomon Lew’s Premier Investments in a near-$1 billion deal last year.

Net profit rose 32 per cent to $40.3 million in the 26 weeks to January 24, as total sales grew 24.5 per cent to $2.28b.

But Myer revealed pro forma earnings, adjusted for the Apparel Brands acquisition, was 17.2 per cent lower “due to investment in strategic initiatives”.

Ms Wirth — who is in her first year of a three to five-year strategy transformation for Myer — launched 30 new beauty brands, as well as 14 new brands in womenswear and menswear, including most recently Topshop and US clothing giant GAP, during the first half.

It plans to launch another 20 new brands in the second half and another 55 in the 2027 financial year.

“We do have an ambition to have a much stronger offering in terms of womenswear and in terms of beauty,” Ms Wirth said.

“That does take time, but we’re well on our journey.”

In the first seven weeks of the second half, sales at Myer’s 56 department stores recorded a 2.2 per cent sales growth, while Apparel Brands grew 0.4 per cent. Just Jeans posted sales growth of 9.8 per cent.

Ms Wirth, who ran Qantas’ popular frequent flyer program, is now attempting to build the Myer One loyalty program into a powerhouse scheme that mirrors the success of Qantas Loyalty by refreshing its brand offerings to draw in more customers.

She said Myer One now had a record 5.1 million active members.

The board declared a fully franked interim dividend of 1.5¢ a share.