A leading department store chain has dropped its worst annual loss in close to ten years, after shoppers pulled back on spending because of cost-of-living pressures.

But Myer is sticking to its transformation plan, as it banks on its standing as the go-to place for gifts to lift its fortunes going into the busy Christmas holiday period.

The 126-year-old business posted a fiscal year 2026 statutory net loss of $276.5million – its worst outcome since a $486million loss in fiscal year 2018, and worse than the $204.4million loss reported in 2025.

Myer blamed the result on the inflationary effects of higher fuel prices due to the Middle East conflict, three interest rate rises in 2026, slower household income growth and a weaker housing market.

But the group is also at the crossroads of a major transition as it tries to marry its traditional department store business with its recent investment in a speciality brand portfolio.

'While the financial outcome for fiscal 2026 is below our expectations, we remain focused on the areas within our control as we continue to execute our strategy,' executive chair Olivia Wirth told a briefing on Wednesday.

The strategy includes offering brands to attract younger customers, with Ms Wirth pointing to Myer's loyalty business, where 50 per cent are under the age of 35. 

'We continue to believe it's the right strategy to create long-term shareholder value,' she said.

The executive chair said Myer would leverage technology in the 2027 fiscal year, including artificial intelligence, as well as push down on costs.

However, trading in the first eight weeks was challenging, if not worse, than for the second half of fiscal 2026, when the Middle East war began.

'We anticipate trading conditions and consumer behaviour will remain volatile over the next 12 months,' she said.

Myer is prioritising getting its Christmas stock into its 56 stores, with its holiday season campaign set to launch in Melbourne next week.

'We do perform well during gifting seasons - we are synonymous with gifting,' Ms Wirth said.

Myer's annual sales, including in-store concessions, totalled $4billion, which was its best result despite being narrowly higher on a comparable basis to fiscal 2025.

Most of that was driven by the concessions, which include brands like Country Road, followed by its online marketplace, home goods, women's fashion and kids products, offset by lower sales in beauty.

Myer's specialty brands portfolio is underpinned by Just Jeans, Jay Jays, Dotti, Jacqui E and Portmans, which it bought from Solomon Lew's Premier Investments in a scrip deal worth almost $900million, with Premier also tipping about $80million in cash into Myer.

It's still trying to extract synergies from that investment, which is another priority for fiscal 2027.

Mr Lew, who has about a 30 per cent stake in Myer through his private company, will join its board as a non-executive director from Thursday.

The news is timely, after Myer revealed Portmans was struggling, and sales at Dotti, Jacqui E and Jay Jays were broadly stable.

But Just Jeans remains a standout, with sales rising 6 per cent during the year to represent about 40 per cent of apparel brand sales.

There was no final dividend for the 52 weeks ended July 25, after Myer paid a first-half dividend of 1.5 cents, down from 2.5 cents in the prior corresponding half.

Its shares rose 4.3 per cent to 18.2 cents in afternoon trading on Wednesday but are still about 62 per cent lower than a year ago.

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