Myer’s mammoth robotic warehouse was supposed to transform its supply chain and revolutionise its online order fulfilment capabilities.
But the operation on the outskirts of Melbourne has been nothing short of a disaster, weighing heavily on its bottom line, costing shareholders their final dividend and sending shares plunging to their lowest level in three years.
While the problems at Myer’s national distribution centre in the Melbourne suburb of Ravenhall had already been disclosed, the price tag to fix them had not been until Tuesday.
Myer said it would cost $32 million to overhaul the warehouse and the work would not be completed until 2026/27.
In the meantime, it is hiring a third-party logistics provider to begin in October handling online orders through the peak holiday period.
Myer blamed the warehouse’s problems for a big decline in its full-year earnings, also announced Tuesday.
The retailer made $36.8 million underlying profit in 2024/25, down 30 per cent from the previous year – but its profit would have been flat if not for the issues at the national distribution centre, executive chair Olivia Wirth told analysts.
Given the drop in profit, Myer elected not to pay shareholders a final dividend for the first time since 2021 after a 2.5 cent per share interim payout in March.
Disappointed shareholders reacted by selling, sending Myer shares plunging 23.8 per cent to 48.7 cents, their lowest level since July 2022.
Spanning 40,000 square metres – about twice the field of the Melbourne Cricket Ground – the warehouse has been a disaster from the start.
It was two years late to open, and a month before it did so in August 2024, a worker was crushed to death responding to a jammed item in one of the warehouse’s 200 robots.
Then during the crucial holiday trading period, a significant amount of clothing – mostly Myer’s exclusive brands that it sells for a high profit margin – became “trapped” in the warehouse, costing the company an estimated $16 million in lost earnings.
Ms Wirth – who was the CEO of Qantas Loyalty when the warehouse was being developed under Myer’s former boss, John King – said Myer still expected to see $20 million of annual cost savings once the distribution centre had been overhauled.
On a brighter note, Ms Wirth said Myer was starting to see benefits from its acquisition of Premier Investment’s portfolio of five Apparel Brands – Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E.
She reported sales were up 3.1 per cent in the first seven weeks of the new financial year after growing 0.5 per cent to $3.68 billion in 2024/25, which for Myer was the 52 weeks to July 26.
Ms Wirth said the year was one of transition for the business, which is in the middle of a multi-year transformation.
“We are making great progress on our growth strategy,” she said.
“We’ll continue to work towards our plans to drive growth and build what we believe will be Australia’s most powerful retail platform.”
Myer ended the year with $168.1 million in net cash, up $54.3 million from the end of 2023/24.
But because of non-cash accounting issues related to the Apparel Brands acquisition, its statutory bottom-line result was still in the red, with a net loss of $211.2 million.
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