Department store group Myer has posted total sales of $4,089 million for the year to July 2026, up 11.3% on an actual basis, but has warned that a wave of promotional activity needed to drag shoppers through the doors is eroding margins across the retail sector.

On a pro forma basis, which accounts for the integration of the former Premier Investments apparel brands, total sales rose just 0.3%, with group comparable sales up 0.7%, as a sharp downturn in consumer sentiment in June and July hit discretionary spending.

The retailer is also rolling out their own media network that competes head on with main stream media and TV networks.

Operating gross profit is expected to land between $1,601 million and $1,607 million, up around 14% on an actual basis but down between 2.1% and 2.5% pro forma, a fall the retailer attributed directly to “higher than planned promotional activity to stimulate demand”.

Operating gross profit margin is forecast at 39.2% to 39.3%, well below the 40.3% pro forma margin recorded in FY25.

Consumers Buckle Under Cost Of Living Pressure

Myer said trading through the second half was volatile month to month, with consumer sentiment falling to its lowest levels in recent times under sustained cost of living pressure.

The retailer pointed to inflationary fuel prices flowing from the Middle East conflict, three interest rate rises during calendar 2026, slower household income growth, a weaker housing market and financial uncertainty across many households.

A stronger May was followed by a material deterioration in June and July, compounded by a warmer than average start to winter in most major Australian cities, traditionally a key period for apparel retailers.

Growth in Home, Womenswear, Kids and Just Jeans, along with strong Marketplace and concession sales, was offset by weaker results in Beauty and at Portmans. Myer Retail total sales rose 0.7%, while Myer Apparel Brands pro forma sales fell 1.3%.

The company has begun finalising its year-end accounts, including an assessment of any impairments and additional significant items required to finalise statutory net profit, a process that could deliver further bad news when full results are released.

Wirth Points To Strategy Progress Despite Downturn

Executive Chair Olivia Wirth said the second half was “significantly more challenging” than either the first half or FY25.

“Whilst performance in the first four months of 2H26 was mixed, including a stronger May, we observed a material downturn in consumer sentiment. This was particularly evident in June and July, resulting in a subdued consumer and weak discretionary spending,” she said.

Wirth said the group remained “cautious on the near-term consumer outlook” but was confident its strategic actions were strengthening Myer’s competitive position and supporting long-term shareholder value.

Loyalty And New Brands The Bright Spots

The MYER one loyalty program delivered a record tag rate of 81.5% in Myer Retail, up from 79.5% a year earlier, with active members climbing to a record 5.3 million from 4.7 million. The program achieved a 55.2% tag rate across Myer Apparel Brands less than 12 months after launching in those businesses.

The group also launched the Myer Media Network, a retail media platform built on the MYER one database, opening a new revenue stream from suppliers and advertisers.

During the year Myer added 37 new beauty brands and 29 across womenswear and menswear, securing access to global names including Fenty Beauty, La Mer, Guerlain and GAP.

The store network continued to be rationalised, with 38 Myer Apparel Brands stores closed and 14 opened. Refurbishment of the Myer Sydney City beauty hall and an upgrade of Myer Morley in Perth are under way, while the lease on Myer Roselands in Sydney has been extended until January 2027.

A new Myer Marketplace platform launched in June with 25,000 additional products, and the group said cost savings from closing its Asia sourcing office and one overseas hub, along with restructuring across retail operations, partially offset cost of doing business and inflation pressures.

Cost of doing business as a percentage of sales was broadly in line with the group’s FY26 target of around 29%, despite lower than expected sales.