Department store Myer has reported flat total sales for the first half of FY25, up by just $2 million to $1.831 million compared to the same time last financial year.
The sales growth was adversely impacted by implementation issues at the retailer’s national distribution centre which launched operationally in Ravenhall, Victoria in August last year.
In its trading update today, Myer confirmed that the NDC is not yet operating as designed.
“During 1H25, Myer flagged implementation issues and delayed ramp-up,” the company shared in its update. “The complications created stock flow issues, including Myer Exclusive Brand (MEB) stock remaining trapped in the facility during Q1 FY25 and led to online fulfilment transferring to stores.
“Management’s priority in the half was to implement contingency planning to enable Myer to perform during the peak trading period, particularly the Black Friday and Cyber Monday promotions. Whilst temporary measures were implemented, MEB sales were adversely impacted in Q1 particularly and stores fulfilled online orders, resulting in increased cost and inefficiencies.”
Thanks to the challenges, Myer has reported a $12 million impact on earnings before interest and tax in the first half of FY25.
“A comprehensive diagnostic review confirmed automation and integration issues, with remediation action plans currently being developed. Myer has also focused on building internal capability to manage the remediation efforts.”
Amid the resolutions, chief supply chain officer Darren Wedding joined Myer in early March from Super Retail Group.
Myer added it will continue to drive operational improvements to extract the projected annual benefits of $5-10 million from the NDC, although realisation of benefits will be delayed.
Revenue for the department store continued to be impacted in the new year, with group sales – including the newly added Apparel Brands from Premier Investments – down 2.6 per cent for the first five weeks of the second half of FY25.
Sales at Apparel Brands – which include Just Jeans, Jacqui E, Jay Jays, Dotti and Portmans – were down by $3 million to $57 million. Myer sales were down $5 million to $232 million.
Myer added it is anticipated that the NDC challenges will continue to impact financial performance in 2H25 as a result of the remediation support.
As for Sass & Bide, Marcs and David Lawrence, Myer reported that the restructure with these brands is underway. This included the recent closure of 10 Sass & Bide stores last year.
“Despite challenging trading conditions in a tough macro environment and complications experienced at our National Distribution Centre, Myer traded well throughout the all-important Black Friday and Christmas trading periods,” Myer executive chair Olivia Wirth said.
“While consumers remain cautious, we reported growth in our comparable and online sales and I’m pleased to report our MYER one loyalty program delivered a record performance with 4.6 million active members and a 79 per cent tag rate.
“In a year of transition, we remain focused on executing our strategic plans to drive growth and attractive shareholder returns.”
Alongside the flat total sales in the first half of FY25, Myer's group comparable sales were up 0.8 per cent. Operating gross profit reduced 1.4 per cent to $656 million, and cost of doing business was $457.8 million, an increase of 1.9 per cent.