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Department store group Myer Holdings (ASX: MYR) has boosted full-year sales by 11.3 per cent to $4.09 billion in FY26 thanks to the merger with Premier Investments' (ASX: PMV) Apparel Brands division last year, but the group endured a significantly more challenging second half as cost-of-living pressures, rising interest rates and geopolitical uncertainty combined to weaken discretionary spending.
The unaudited trading update, released to the ASX today, reveals pro forma comparable sales growth of just 0.7 per cent across the combined Myer and Apparel Brands portfolio, with operating gross profit of about $1.6 billion.
However, profit margins have slipped to between 39.2 to 39.3 per cent, down from a pro forma 40.3 per cent in the prior year, although the cost of doing business held steady at around 29 per cent of sales.
The headline sales figure was bolstered by the inclusion of a full year of trading from the Apparel Brands business, which Myer acquired from Premier Investments in March last year.
On a pro forma basis, treating both businesses as though they had been combined for the entire prior period, total sales growth was a more modest 0.3 per cent.
The result marks a sharp divergence between the two halves of FY26 for Myer Holdings.
The first half delivered total sales of $2.28 billion and underlying net profit after tax of $51.7 million, up 21.7 per cent on a pro forma basis, with statutory NPAT of $40.3 million rising 32.8 per cent.
Myer declared an interim dividend of 1.5c per share and reported net cash of $287 million at the half-year mark.
The second half proved far tougher as Myer flagged volatile month-to-month trading conditions compounded by three calendar year 2026 interest rate increases, higher fuel prices stemming from the Middle East conflict, and a warmer-than-average winter that dented seasonal apparel sales.
June and July were particularly weak months, with the company revealing that consumer sentiment deteriorating materially.
Myer Group executive chair Olivia Wirth says the second half of FY26 has been characterised by a "volatile and significantly more challenging macroeconomic and retail environment" than the first half or even FY25.
“Despite these challenges, we have continued to make substantial progress executing against our Myer Group Growth Strategy and progressing our Value Creation program and integration activities," she says.
“We continued to strengthen the business, achieving record loyalty engagement and tag rates, expanding our brand and product offering, launching our retail media platform, progressing our store network optimisation program, implementing a new Marketplace platform and delivering value creation benefits and further integration synergies.
“While we remain cautious on the near-term consumer outlook, we are confident that the strategic actions we are taking today are strengthening the group’s competitive position, resilience and supporting the creation of long-term shareholder value.”
The cautious tone today contrasts with Wirth's more optimistic commentary at the half-year results in February, when she highlighted the strength of the integration with Apparel Brands and flagged improving momentum.
The trading update did not include a full-year underlying NPAT or earnings per share figure, with statutory results and any significant items, including potential impairment charges, still to be finalised ahead of the full results release.
In FY25, Myer booked a $213.3 million non-cash impairment on the Apparel Brands acquisition, contributing to a statutory loss of $211.2 million. Underlying NPAT for that transition year was $36.8 million, down 30 per cent.
Despite the challenging trading backdrop, Myer points to strategic progress on several fronts.
The group's MYER one loyalty program hit a record 5.3 million active members, up from 4.7 million in FY25.
Across the Apparel Brands network, 38 underperforming stores were closed during FY26 while 14 new locations were opened as part of a portfolio rationalisation program.
Myer is targeting more than $30 million in annualised integration synergies from the Apparel Brands combination, plus an additional $10 million from streamlining the Sass & Bide, Marcs and David Lawrence brands.
Myer shares were hit hard this morning following the announcement, falling as much as 12 per cent to a low of 22c in the first half hour of trading.
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