Myer’s sales growth fails to prevent deeper loss and dividend reduction

Sales milestone gives way to a statutory loss

Myer Holdings Limited (ASX:MYR) passed a symbolic milestone in FY26, with total sales reaching $4.09 billion. The harder number for shareholders is further down the income statement: statutory loss after tax widened to $276.5 million, or 16.0 cents per share, after $319.0 million of significant items on an after-tax basis.

The result was not simply an acquisition accounting artefact. Underlying EBIT fell 7.0% to $139.4 million and underlying NPAT declined 2.9% to $42.5 million, while comparable sales increased only 0.7%. Myer said month-to-month trading became increasingly volatile in the second half as cost-of-living pressures, three interest-rate increases in calendar 2026 and a warmer start to winter constrained discretionary spending. The group also increased promotional activity to stimulate demand, leaving operating gross profit margin at 39.2%, below the pro forma FY25 level of 40.0%.

The deterioration marks a sharp contrast with the stronger first-half showing described in the strong 1H26 sales result, when sales rose 24.5% and underlying NPAT increased 21.7%. Myer’s full-year account shows how quickly that momentum faded as the consumer environment weakened late in the year.

Impairments reset the value of the retail platform

The largest charge was a $279.6 million one-off, non-cash post-tax impairment across goodwill, brand intangibles and store assets. Before tax, the impairment totalled $283.1 million against goodwill and brands, alongside $100.2 million of asset impairments and write-offs. Myer Retail absorbed a $229.3 million impairment, while the Myer Apparel Brands cash-generating unit incurred a further $138.1 million.

Those assessments left both cash-generating units valued at their recoverable amounts, making the forecasts behind them unusually important. Myer’s five-year assumptions include average revenue growth of 2.8% for Myer Retail and 2.1% for Apparel Brands, with pre-tax discount rates of 13.1% and 13.9% respectively. The report cautions that an adverse movement in a key assumption beyond FY27 could produce another impairment loss.

The warning is particularly relevant because Myer’s balance sheet remains heavily lease-based. Cash and cash equivalents fell to $100.1 million from $167.2 million, while lease liabilities stood at $1.46 billion. Free cash flow improved to $213.0 million, but principal lease payments rose to $254.1 million, illustrating the difference between reported net cash and the broader obligations attached to the store network.

Apparel Brands integration faces its second test

Myer Apparel Brands delivered $760.0 million of sales, down 1.3% on a pro forma basis, with segment result falling 3.3% to $143.3 million. Just Jeans was the bright spot, growing sales 6.0% and accounting for about 40% of Apparel Brands sales, but Portmans declined 10.2%, Jacqui E fell 7.4%, and online sales across the portfolio dropped 9.2%.

The acquisition and integration remain central to the investment case. Myer reported approximately $20 million of annualised Apparel Brands synergies in FY26 and continues to target at least $30 million from the integration from FY28. It also expects a further $10 million of annualised benefits from the completed integration of sass & bide, Marcs and David Lawrence from FY27. That ambition now has to contend with softer sales, promotional pressure and the impairment already recorded against the portfolio.

There were operational gains elsewhere: active MYER one customers reached a record 5.3 million, online sales rose 9.1% at group level, and the new Marketplace platform went live in June. Myer also continued work on its troubled National Distribution Centre, with a robotics proof of concept planned for peak 2026 and Toll supporting the distribution network. These initiatives may improve productivity, but the report does not yet quantify a financial contribution from the automation trial.

Dividend cut and expanded funding headroom

The board paid a fully franked interim dividend of 1.5 cents per share but declared no final dividend, taking the full-year payout to 1.5 cents compared with 2.5 cents in FY25. Executive KMP will also receive no FY26 short-term incentive payment, despite hurdles being met on one financial and two non-financial measures, while the FY24 long-term incentive rights will lapse after the positive absolute TSR gateway was not achieved.

After year end, Myer increased total debt facilities available to $200 million by raising its revolving cash facility from $50 million to $100 million and extending that facility’s maturity to May 2030. At balance date, $106.1 million of the existing $150 million facility remained available, alongside $100.1 million of cash. The additional capacity provides flexibility, but it is not the same as an improvement in trading cash generation.

The report also discloses WorkSafe Victoria charges against Myer relating to the 2024 contractor fatality at the National Distribution Centre. The initial filing hearing is listed for 28 September 2026, and Myer says it is too early to quantify any financial implications. Solomon Lew’s appointment to the board from 24 September adds significant retail experience, but it also places greater focus on whether the group’s strategy can turn scale, brands and customer data into earnings rather than another round of restructuring and write-downs.