Myer’s Makeover Mission

Small Caps | Jun 16 2025

Preceded by a disappointing trading update in the days prior, Myer's investor strategy day highlighted multiple new initiatives and potential sources of growth.

-Myer's strategy day highlights management's focus on 'execution over targets'
-Retailer laid out ambitious three-to-five-year roadmap
-Margin pressure, cost of doing business dominate trading update
-Synergies from Apparel Brands on track

By Mark Woodruff

During retailer Myer's ((MYR) investor strategy day in late May, its first since 2017, Executive Chair Olivia Wirth pulled no punches, declaring the era of empty promises over. The new mantra? Execution over targets.

The retailer laid out an ambitious three-to-five-year roadmap spanning loyalty schemes, private label refreshes, omni-channel investment, and a full supply chain overhaul.

Analysts saw much to like, but also flaggedclear execution risks. A lot of heavy lifting remains to be done.

Key takeaways differed. Petra Capital is most upbeat about opportunities within sourcing & supply chain, while Morgan Stanley highlights progress being made on the Myer Exclusive Brands/Owned Brands portfolios.

Following interim results in March, analysts felt the investment case for Myer depended on the success of integrating the Apparel Brands' assets from Premier Investments ((PMV)) and executing a successful turnaround.

Premier swapped its non-core Apparel Brands for shares in Myer valued at $864m, in a transaction completed in January.

The acquired brands are now available via myer.com.au providing Myer with scope for revenue synergies through cross-shopping opportunities with Apparel Brands customers and ecommerce upselling.

Myer operates 56 department stores across Australia along with a significant online business (myer.com.au). The group also owns specialty fashion brands such as sass & bide, Marcs, and David Lawrence, and runs one of the country's largest loyalty programs, Myerone.

Trading update

Management at the time of interim results stressed a 'reset' was underway to position Myer for future growth. The focus was on completing the team build-out and executing revenue synergies, with further details then expected at the company's May strategy day.

Just a few business days before that marker, management issued an unaudited trading update for the first 16 weeks of the second half.

Unfortunately, the update referenced margin pressure from heightened promotional activity across the broader retail sector, increased costs of doing business (in particular, store wages and occupancy outgoing costs impacted by inflation, as well as investment in additional leadership capabilities) as well as unfavourable currency movements.

Investor strategy day

After attending the investor strategy day, Morgan Stanley feels Myer is making tangible progress on its turnaround ambition, particularly in the integration of the Apparel Brands portfolio.

It remains early days, cautions the broker, with execution risk elevated due to the complexity and the number of moving parts involved.

That said, Myer articulated a clear strategic roadmap, in the broker's view, supported by a capable leadership team committed to delivery. Encouragingly, synergy targets appear to be tracking ahead of expectations, with management expecting over $30m by the end of FY26.

Canaccord sees $30m as achievable, partly due to opportunities for leveraging the Myerone loyalty plan, while Morgan Stanley sees further upside potential as integration efforts gain momentum.

Management also noted increased costs relating for ramp-up and remediation at the new National Distribution Centre (NDC) in Victoria. Work is proceeding on ways to solve the automation and integration ramp-up issues, but in the meantime, Myer has developed an interim solution.

Myer's total sales were running comfortably ahead of theforecast at Canaccord Genuity, yet cost pressures proved worse-than-expected. While Apparel Brands sales improved since last reported figures, but they remained in negative territory.

Over 16 weeks, sales for Myer and Apparel Brands were $837.2m and $211.2m, a respective beat and miss of 1.9% and -3.7%, compared to the prior year.

Loyalty program

With 4.6m active members spending nearly three times more than non-members, Myer's loyalty program is a hidden gem.

A relaunch of Myerone in October will bring tailored offers, notes Morgan Stanley, with a focus on delivering more personalised offers aimed at increasing customer visit frequency and transaction value.

Beyond customer engagement, the program will also serve as a strategic data asset, explains the broker, enabling data-driven decision-making across the business, spanning brand curation to store layout optimisation.

Both operational efficiency and the customer experience are expected to improve.