I would now like to hand the conference over to David Akers, General Manager, Investor Relations. Please go ahead.
Good morning, everyone. For today's briefing, we have Myer Group Executive Chair, Olivia Wirth, and Group Chief Financial Officer, Kathy Karabatsas, on the call. Olivia will provide a brief overview of FY 2026, and Kathy will step us through the Group financial results and segment results. Olivia will then provide an overview of our priorities for FY 2027, and an update on trading for the first eight weeks of the first half of 2027. There will be time for questions at the end. Turning to slide two, and handing over to Olivia.
Thank you, David, and good morning, everyone. Today's result is in line with the update we provided in July. Despite the challenging macroeconomic conditions and volatile trading in the second half, comparable sales remained positive for the year, and the Myer Group achieved more than AUD 4 billion in sales for the first time in its history. Operating gross profit exceeded AUD 1.6 billion. We delivered cost of doing business in line with our FY 2026 target, maintaining strong cost discipline. That is despite inflationary pressures and inclusive of our reinvestment into strategic priorities. We finished the year with a net cash position of AUD 100 million. While the financial outcome for FY 2026 is below our expectations, we remain focused on the areas within our control as we continue to execute against our strategy. Turning to slide three. FY 2026 was a year of significant delivery across the Group.
We relaunched a revamped MYER one, launched our shoppable app, and expanded our loyalty partnerships. We achieved another record tag rate in Myer Retail of 81.5%, and in Myer Apparel Brands of 55.1%. We increased our active MYER one customers to a record 5.3 million. When we first outlined our strategy in May 2025, we highlighted our focus was on attracting a younger customer. I am pleased to report that of the new customers that joined our loyalty ecosystem in FY 2026, approximately 50% of these were under the age of 35. The addition of brands such as Fenty Beauty, TOPSHOP, and Gap is resonating strongly with younger customers, helping to attract new customers to Myer, and broadening engagement within that strategically important under 35 age cohort.
In product and brands, we invested in and relaunched our Myer exclusive brands, secured new brand partnership in womenswear, menswear, and in home. Pleasingly, we are seeing more fashion and beauty brands choosing to partner with Myer because they believe in what we are doing. With our omni-channel objectives, we continue to optimize our store networks. We closed 38 Myer Apparel Brand stores and opened 14. We also commenced refurbishment of the Sydney Beauty Hall and Myer Morley in Perth. Our new marketplace platform is live and offering customers a wider range of products and brands. We have increased the product range by approximately 25% already, with a strong uptake in home for furniture and entertainment, with more to come in fashion and apparel. FY 2026 marks the transition from foundation building to benefits realization, with our value creation and integration initiatives beginning to deliver tangible benefits to the Group.
Overall, we delivered approximately AUD 17 million of benefits from our Value Creation program, AUD 20 million of synergies from Myer Apparel Brands integration, and with the sass & bide and Marcs and David Lawrence integration now complete, AUD 10 million of benefit from FY 2027. This will be increasingly important in the current macroeconomic environment and will provide a strong platform for FY 2027 and beyond. With that, I will hand over to Kathy to take you through the Group's financial performance in more detail.
Thank you, Olivia. Good morning, everyone. Turning to slide five. We have presented both actual and pro forma comparisons to provide a clearer view of the underlying performance of the business. Following the completion of the acquisition of Myer Apparel Brands and the associated accounting, we have restated some of the FY 2025 numbers. Despite a challenging consumer environment with increased trading volatility in the second half of the year, comparable sales for Myer Group increased by 0.7%. On an actual basis, total sales increased 11.3%, with the Myer Group achieving more than AUD 4 billion in sales for the first time. Growth was driven by online channel growth of 9.1% and concession growth of 8.2%. Operating gross profit increased 14% on an actual basis.
On a pro forma basis, operating gross profit was 1.6% lower than the prior year, reflecting category mix impacts and a higher level of promotional activity, in particular in the second half of the year. Cost of doing business was 2.7% higher on a pro forma basis after strategic investments. Cost of doing business as a percentage of sales was 29.1% and in line with our FY 2026 target. Underlying EBITDA increased 7.9% on an actual basis, while underlying EBIT was 7% lower on an actual basis. On a pro forma basis, EBITDA, EBIT and NPAT were lower than FY 2025, reflecting softer trading conditions, ongoing inflationary cost pressures, and continued execution of strategic initiatives across the Group. Turning to slide six. This slide outlines the performance of the Myer Retail segment. Comparable sales increased 1% in FY 2026, reflecting growth in women's fashion, home, kids, concessions, and marketplace.
Total sales increased 0.7% to AUD 3.3 billion, broadly in line with FY 2023 post-COVID peak levels and demonstrating the resilience of the Myer Retail business. MYER one tag rate reached a record 81.5%, reinforcing the strength of our customer engagement and loyalty ecosystem. Online sales also continued to grow, up 4.2%, supported by marketplace expansion and ongoing improvements to the customer experience. Operating gross profit was 1.3% lower than the prior year, with gross margin impacted by category mix and a higher promotional activity across the market in the second half.
As illustrated in the brand mix bridge, growth in concessions helped offset lower sales in national brands and Myer exclusive brands. The segment result was 3.5% lower than FY 2025, reflecting the lower operating gross profit outcome. Overall, Myer Retail delivered positive comparable sales growth, continued growth in online sales, and a record MYER one tag rate. Turning to slide seven.
This slide outlines the performance of Myer Apparel Brands on a pro forma basis. Comparable sales were 0.3% lower than the prior year, reflecting strong growth in Just Jeans and stabilization of performance in Dotti. This was offset by softer performance across the remainder of the portfolio, particularly in Portmans. Just Jeans continues to perform particularly well, with sales increasing 6% during the year and now representing approximately 40% of Myer Apparel Brand sales. The performance of Just Jeans reflects the progress being made through initiatives including range simplification, the investment in new format Just Jeans stores, and improved operating disciplines. We are applying these learnings more broadly across the Myer Apparel Brands portfolio. Operating gross profit was 1.3% lower than the prior year, with margin impacted by promotional activity and the broader trading environment. As a result, segment performance was 3.5% lower than pro forma FY 2025.
A key achievement during FY 2026 was the rollout of MYER one across the portfolio, with the tag rate reaching 55.1% only 12 months after launch. This provides us with a stronger customer data set and supports more targeted customer engagement across each brand. The integration of Myer Apparel Brands continues to progress well, with further opportunities to improve performance through customer insights, operational efficiencies, and Group-wide capabilities. Turning to slide eight. This slide bridges cost of doing business from FY 2025 to FY 2026. Cost of doing business as a percentage of sales was in line with our FY 2026 target at 29.1%, inclusive of underlying inflation and the investment in key strategic initiatives throughout the year. Cost pressures across Myer Group were offset by AUD 42 million of value creation and integration synergy benefits at the CODB line.
The FY 2026 value creation program delivered AUD 14 million of benefits, with combined integration synergies across sass & bide, Marcs, David Lawrence, and Myer Apparel Brands delivering AUD 28 million of benefits. Turning to slide nine. This shows our cash flow. Operating cash flow increased to AUD 9.9 million in FY 2026, driven by an increase in EBITDA with the inclusion of Myer Apparel Brands, offset by working capital movements due to increased receivables, prepayments, and payables for operating activities. Capital expenditure was lower due to timing of investment in store renewals and the national distribution center. Free cash flow was higher, reflecting higher operating cash flow and lower CapEx. Net cash outflow was AUD 23.7 million lower than the prior year, reflecting higher free cash flow and no additional repayment of borrowings.
This was offset by a significant increase in the principal portion of lease liabilities due to the inclusion of Myer Apparel Brands' leases in the FY 2026 year. Turning to slide 10. This summarizes the Myer Group balance sheet. At year-end, the Group had a net cash position of AUD 100 million, with inventory broadly in line with prior year. Lease liabilities decreased, reflecting higher cash lease payments, partly offset by the new Myer Group support office lease, Myer Retail lease modifications, and CPI increases. Intangibles decreased following the impairment charges against brands and goodwill.
At year-end, Myer Group debt facilities totaled AUD 150 million. Total facilities available to the Group subsequent to year-end totaled AUD 200 million, having increased our facilities with one of our banks to AUD 100 million and extending the maturity date of the facility from FY 2028 to FY 2030. With that, I'll hand back to Olivia.
Thanks, Kathy. I'll now provide an update on our priorities for FY 2027 and trading for the first eight weeks of the year. Turning to slide 12. The Myer Group growth strategy remains unchanged, and we continue to believe it is the right strategy to create long-term shareholder value. At the same time, the operating environment has become increasingly challenging, with significant macroeconomic pressures impacting consumers. Our customers are experiencing ongoing cost of living pressures, and there is a heightened consumer uncertainty and rapid changes in technology reshaping the retail landscape. In response, while remaining committed to our growth agenda, we are increasing our focus on the initiatives within our control that can enhance productivity, simplify the business, improve customer outcomes, and accelerate value creation. Therefore, our focus for FY 2027 is twofold: disciplined execution of the growth strategy and accelerating the delivery of value creation initiatives across the Group.
Turning to slide 13. Our strategic priorities for FY 2027 reflect both consistency and agility. The growth strategy remains unchanged. However, we are adapting our execution priorities to reflect the current consumer environment and the pace of change occurring across retail. While some growth initiatives may take longer to realize their full potential in the current macroeconomic environment, we remain committed to investing in the capabilities that will support sustainable long-term growth. We're increasing our focus on value creation initiatives that can improve productivity, simplify operations, and deliver benefits in the near term. This includes leveraging technology and AI opportunities, accelerating integration benefits, optimizing our operating model, and maintaining a disciplined approach to costs. The second half of FY 2026 demonstrated that many of the initiatives underway are beginning to translate into operational and cost benefits.
Key priorities for FY 2027 also include further enhancing our MYER one and customer engagement, expanding our products and brand portfolio, progressing network optimization and strategic store renewals, advancing our sourcing and supply chain initiatives. We remain focused on simplification and capturing additional benefits from our value creation program to help manage costs of doing business while continuing to realize additional integration synergies from Myer Apparel Brands. Turning to slide 14. Trading in the first eight weeks of FY 2027 has remained challenging, reflecting continued cost of living pressures and subdued consumer confidence, which continue to impact customer spending patterns. We've also seen some recent challenges in global shipping. While trading was softer through August, we have seen improved momentum through September, including across Father's Day trading period, providing encouragement as we approach the important peak trading season.
Overall, comparable sales for Myer Group were flat, while total sales were 2.7% lower versus prior corresponding period. For Myer Retail, comparable sales were 1.8% higher, and for Myer Apparel Brands, comparable sales were 5.9% lower. Consistent with the priorities outlined today, our focus remains on the areas within our control. We are accelerating value creation initiatives, integration benefits, productivity improvements, and disciplined cost management while continuing to invest in the capabilities that underpin our long-term growth strategy. Looking ahead, we anticipate trading conditions and consumer behavior will remain volatile over the next 12 months. However, the strategy remains unchanged, our priorities are clear, and we remain focused on disciplined execution, value creation, and delivering improved outcomes for our shareholders. With that, I will hand back to David for questions.
Thanks, Olivia. We will now take your questions. Ashley, if you can please open up the line for our first question.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Garth Francis with MST Marquee. Please go ahead.
Thank you. All right. Good morning, Olivia, Kathy, and David. Thank you for taking my questions. Just on the sales trading update, appreciate that there will be some impact from the Beauty Hall closures and the WA closure. Does that fully explain the delta between the comp sales growth and the total sales growth for Myer Retail?
Yeah. Yes, correct, Garth. Comparable sales takes into account the fact that we are investing in Sydney Beauty, in the Beauty Hall, and the Morley disruption as well. And Roselands. Yep.
And Roselands. Okay.
Yeah.
Terrific. And, those should all be completed. Are there any other rebounds that are planned for the rest of 2027?
We are aiming to have Sydney Beauty completed by peak this year. Morley will reopen in the next few weeks, and Roselands will close at the end of January. There are no other store disruptions that we are planning in the second half at this stage.
Perfect. Thank you. Then just in terms of the comment on freight, maybe if we could also just touch on the currency as well. My understanding is that the hedge book means that the changes in Aussie dollar are only going to be a benefit that is potentially late second half or first half of 2028. Then the call-out on freight, these are sort of just wound up in the gross margin expectations. It is just, how are you handling that, and have there been any disruptions related to the typhoons and weather that may impact your either Christmas sales or late in 2027?
Yes. So just on FX and hedging, yes, we will see a benefit in the second half, based on our hedge book. You are correct there, Garth. As it relates to freight, we have seen delays, in some cases two to three week delays, given the global challenges that we face from a trade perspective, and typhoons in particular in the last few weeks have really impacted our ability to bring in our summer stock. That is coming in now, but it is slower than we would like.
The only thing I would add, Garth, is that obviously we have prioritized Christmas trim.
Yes.
Christmas is already here. We open Christmas next week in Melbourne, for example. So we have prioritized Christmas. But as Kathy mentioned, there is particularly some summer fashion that has been delayed due to weather conditions.
Right. If I may, one more. The promotional environment called out specifically in the second half. Is that specific to a particular category or is that across Myer's offer? How has the year started? I appreciate that after end-of-financial-year sales is a short period of time, but if you could also highlight whether there has been any change in that.
I think you will see that it is across the market. It is market-wide. You will have heard other retailers talk about the promotional cadence and the depth of promotion that was seen in the second half. We talked about that in our July update, and it is across all sectors of retail, and we are seeing that across the board. Obviously, it is the mid-season and end-of-season clearance, which are underway at the moment, and then we will obviously go into our peak trade period in Black Friday. We do expect that that will come early again this year, but we are ready to trade as best we can during that period. That provides a unique opportunity for us to make sure that we capture those Christmas gifting opportunities, particularly in Myer, because we believe that will be early again this year. Yes, the depth of promotion continues.
We saw that in the second half, and we expect that will continue for the foreseeable future.
An improvement on gross margins feels quite difficult at this point.
Well, yes and no. We are working through that, Garth. Yes, promotional activity does impact, as you know, gross margin. So yes, it will take some time.
But obviously for us and where the focus has been as well, Garth, is we do, particularly from a Myer Retail perspective, there is a focus on our private label businesses.
Yes.
We saw strong performance in home and kids, for example, in FY 2026. That's obviously at a higher margin. We've relaunched our Myer exclusive brands, the private label brands from a women's and men's fashion perspective. That's early days. But that's obviously an important part for us going forward. And apparel brand business, obviously, also a focus on making sure that we can maintain margin as best we can. So we're alive to it, and making sure that promotions are managed accordingly with a focus on margin over the medium to longer term.
Yeah. The only other thing I would just add to that, Garth, is we have seen improvement in our Apparel Brands business in our gross margin rate. Maybe at the expense of sales, but we are improving gross profit margins there. We're very happy and pleased with how that is going from a gross margin perspective.
Thank you.
Your next question comes from Julia de Sterke with Morgan Stanley. Please go ahead.
Morning, guys. Thanks for taking my question. Just firstly, just back on the trading update, wondering if you could just give me a bit more commentary on what you're seeing through September. Was that entirely driven by Father's Day and kind of consumers coming in for events? I guess, yeah, any more detail you can give on how you're seeing the consumer evolve from August through September and what you can pin that improvement down to.
Yeah. I mean, overall, again, just to set the scene that there is some volatility, and we outlined this particularly in our July update because we actually saw significant changes month-on-month. It's just to point out that that continues, and we do expect that volatility to continue. So there was continued softness in August. From the Myer Retail perspective, what you see is for Myer Retail, we do perform well during gifting seasons. We are synonymous with gifting and where there was a purpose and a reason for the customer to shop in the lead-up to Father's Day, we saw some momentum in sales during that period of time. It was the second-biggest Father's Day period for Myer.
So that shows you that when there's a reason for shopping, as there was for gifting during Father's Day across multiple TPCs, whether that be fragrance for men, whether that be polo shirts for Father's Day, we performed well during that period.
We had a good start to mid-season sale in September.
Yeah. Good start to mid-season sale and obviously taking those learnings to how we'll make sure we can best perform during the next gifting season, which is Christmas, and obviously a peak period for us.
Got it. Then maybe just one more question on Apparel Brands. Just in terms of the non-Just Jeans brands, are you at the point yet with kind of having loyalty for enough time and at enough penetration to be able to understand what you need to do in those businesses from kind of a product perspective or a store network perspective?
Yeah. We are looking at a broader data set than just MYER one. We have rolled that out. That has been about 12 months. We are seeing about 55% tag rate. Yes, the answer is we are far better informed on who the customer is today and how we are seeing the customer, I guess, behave across the five brands and more broadly within the Myer ecosystem. We also did a ton of piece of work to better understand the broader market. Looking at the customer, looking at competitive brands, understanding who is performing well in this market. We have a whole of market view from a fashion business perspective. These things do take time. We have started to see some great improvements in Just Jeans.
Kathy spoke to in the results about the improvement that we saw in the second half with Dotti, and these are being informed by the data that we are getting. Importantly, we are also seeing very high tag rate in Jacqui E and Portmans, but it will take some time to, in particular for Portmans, to turn that business around. Matt McCormack has joined as the CEO of Apparel Brands. There is a plan in place where they are taking immediate action to try to improve that Portmans business, and that will just take time. That will take six to 12 months at the very least to see that turnaround. But we are confident in that, and we are much better informed to do so given the data set that we now have, and we are very clear on the customer of today and who the customer for tomorrow should be.
Great. Thank you.
Your next question comes from Sam Haddad with Petra Capital. Please go ahead.
Hi, good morning, Olivia and Kathy. My questions are around the NDC. Can you give us an update in terms of how you're positioned and ready for peak season around the proof of concept, where your confidence around that being executed through the peak trading period?
Yes, Sam. We are in the process of going live with the proof of concept. As we've mentioned before, the plan is to go live through this peak season. We also have our 3PL in Toll supporting us as we did last year. We had a successful peak last year from a fulfillment perspective. We are confident that we will be able to go live with the proof of concept and understand how it operates efficiently and effectively so that we can determine the longer-term solution.
If that goes to plan, what's the next step after that? The remaining part of your NDC, which is two-thirds of the area, still needs to be built out, and what's the timeframe for that before you ultimately shift your Apparel Brands into your NDC?
Yeah. We are going to take our time to make sure that the proof of concept is operating the way that it delivers the throughput that we require, Sam. As a result of that, it will be after peak that we reassess that throughput and make a decision then on the longer-term solution. It's fair to say that across the last 12 months, the remaining part of our NDC is operating efficiently. We have been optimizing it as we go, and it will also run through peak as it did last year. The key is to test the proof of concept, take the learnings from it, and then consider our longer-term solution as part of that.
Where do you stand today? When do you expect at the best time that the Apparel Brands will go to the NDC? What is your outlook at this point?
We are currently working through that, Sam, and it will be sometime mid-next year that we come off the Apparel Brands transitional services agreement to supply chain.
I am just trying to marry, sort of reconcile that with your synergies, because I understand that realizing that AUD 30 million of synergies is dependent on that NDC going live. And you sort of guided the market that you expect the full synergies to be realized by FY 2028. But it sounds like that is mid-FY 2028, given what you just said?
No. It will be determined, Sam, once we have completed the first half and been through peak, and we will validate it at that point as to the exact timing of those synergies. But we are planning to come off the TSA in August of 2027.
Okay. Just finally on that, just the cost in all this way of your previous peaks pulled out the AUD 32 million in the proof of concept components and all that. Are there other costs that we need to be aware of that we should be mindful of in terms of getting this live by August 2027?
No.
Right. Okay. Thank you.
The next question comes from Chami Ratnapala with Bell Potter Securities. Please go ahead.
Hi, team. Good morning, and thanks for taking my questions. I think two from me. Firstly, could you talk to the outperformance in concessions there in FY 2026? I think you sort of answered a previous question on which categories are outperforming or doing well for the department store channel at the start of FY 2027, Olivia. Just keen to hear on the concessions outperformance and anything, has that continued into FY 2027 as well?
Yeah. What you'll see obviously is the ongoing improvement in performance from a concessions perspective is important, Chami, to recognize that there are conversions during the year. That's where you'll see a shift in, say, national brands or wholesale brands into concessions because there are a number of conversions in addition to new brands coming in. Just take that into consideration from a conversion perspective. Obviously, all three continue to be a key component for us, whether that's concession, whether that's national brands and a private label. Each of those play a very important role in terms of fashion, in terms of home, in terms of kids. We'll continue to focus on bringing newness in, both from a national brands perspective and also in concessions. We called out womenswear, for example.
In the year, that category grew, and that's the first time womenswear has grown for Myer since 2017. Which shows that's just a shy of 5%, first time it's grown since 2017, which is a reflection of exiting brands and entering the right brands that are attractive to a broader range of customer that is starting to take shape.
Perfect. Thanks for that, Olivia. Secondly, I think, for Kathy, 29% CODB cost percentage of sales target. Given the current sales trend of down 2.7%, still early and the peak trade not reflected here, but how are you going to maintain the 29% with the current sales trend?
Thanks, Chami. We have an ongoing value creation program. As you saw, we delivered benefits that offset some of those increases in 2026. That is ongoing into 2027. We have a plan to deliver significant value creation in 2027. This is part of what we now do every day. When we talk value creation, it's also optimization. It's not just taking costs out, although taking costs out is a big part as you optimize. It's about optimizing processes as well. So it'll be through value creation that we will look to offset, Chami, and also through optimizing our integration synergies. As we've now brought Marcs and David Lawrence into the business, we've been able to deliver on the AUD 10 million of synergies, but there is more there for us to continue to focus on and optimize. So it's just an ongoing part of what we do every day now.
Okay, great. Thanks for that and taking my questions, that's all for me.
Thanks, Chami.
Your next question comes from Forres Salekian with Barrenjoey. Please go ahead.
Morning, guys. Just one from me. On the Apparel Brands business, it looks like in the trading update, there's just been a bit more of a deterioration than maybe the market expected. Can you just go into a bit more detail on what's actually driven that and how you're sort of thinking about turning that around from here?
Yeah. That's largely been driven by Portmans' performance. As we've indicated before, there are some challenges with that brand, and there is a requirement for us to start to see some improvement come through, and we're going to need to change some of the product offering, have a look at the way that we're going to market from a promotional perspective as well. There is a plan in place, which is going to take a bit longer to turn that around, but that's how you should read into that number that, unfortunately, it has been impacted by the performance of Portmans.
Got it. Thanks, guys.
Once again, if you wish to ask a question, please press star one on your telephone. The next question comes from Garth Francis with MST Marquee. Please go ahead.
G'day, guys. Thanks for taking the follow-up. Just paying no final dividend, and the cash conversion that happened, I presume you're just being conservative. Can you maybe just talk to your CapEx expenditure estimates for 2027 and whether you expect cash conversion or what level of cash conversion we could expect for 2027?
Garth, what I would say to you is we've got a AUD 65 million capital envelope in FY 2027, no different to the AUD 65 million that we delivered in FY 2026. As it relates to the dividend, we have a policy on a dividend payout policy of somewhere between 40% and 60%, and we've paid at the top end of the range for FY 2026, so we're quite comfortable with that.
Great. And cash conversion for 2027, are you expecting to have a big working capital investment again? If you can just go into a bit of detail what that build in receivables was.
Yeah. It'll be similar to FY 2026, the cash conversion in FY 2027, Garth. And the buildup in receivables is just timing at the end of the financial year.
Thank you.
There are no further questions at this time. I will now hand back to Olivia Wirth for closing remarks.
Many thanks all. Appreciate you taking the time in what I am sure is a busy day. We do appreciate you dialing in, and we look forward to having many one-on-one conversations with you over the coming days. Thanks again for joining. We do appreciate your time. Thank you.
That does conclude our conference for today. Thank you for participating. You may now disconnect.