Myer's Turnaround Bet Shows Its First Real Signs Of Life

Fund managers track early customer engagement gains against the scale of investment needed to fund the department store's revival

31 Jan 2026 · 4 min read

Signs of life in Myer's customer base drove one of its strongest months in November 2025. Perpetual Asset Management said the stock rose 16.5 per cent following the release of the company's annual report, which showed total sales increasing year on year, led by a 6.9 per cent uplift in Myer One customer engagement, a signal of improved brand momentum within the retailer's multi-year turnaround strategy. Ellerston Capital, holding an overweight position, reported the same gain as one of its main positive contributors for the month.

An investment scale that first spooked the market

That progress followed a rough patch just two months earlier. Pendal Group reported the stock fell 27.8 per cent following its FY25 result, when revenue came in slightly ahead of consensus but higher costs related to rent and staffing materially disappointed on earnings. Perpetual Asset Management said the scale of the upfront investment required, across management capability, brands, marketing, internal technology and logistics, had surprised the market, even as the manager argued the combination with the Apparel Brands business was likely to drive significant cost-out for the combined entity over time. QVG Capital's own September 2025 update suggested the downgrade to Myer's earnings outlook contributed positively to its returns that month, an outcome offset by strong share price performance working against some of its more speculative short positions elsewhere in the portfolio.

There is significant operating leverage to be gained if Myer can execute on its plan over the next two-to-three years, which should see a material improvement in earnings and cash flow... Turnarounds are challenging and not without risk. But there is very material upside in Myer if these initiatives are successful.

— Perpetual Asset Management, Monthly Report, September 2025

A cash-funded turnaround with a defined time horizon

Perpetual Asset Management's thesis throughout has centred on Myer's ambition to regain relevance with consumers in apparel and beauty after years of stagnating revenue growth and weak profitability, a plan the manager said is deliberately backed by a strong net cash balance sheet designed to support the business through the transition without balance sheet constraints. The manager said its position in Myer is sized specifically to reflect the risk-reward profile of a genuine turnaround bet, acknowledging the substantial upfront investment while pointing to the operating leverage available if the strategy succeeds over a two to three year horizon.

A volatile ride even within the turnaround

The path has not been smooth even after the November rally. Ellerston Capital reported its overweight Myer position turned into a negative contributor in January 2026, falling 8.4 per cent, a reminder that a turnaround story built on significant upfront spending can swing sharply in either direction depending on how the market interprets each incremental update on trading and cost performance.

What managers are watching next

With Myer One engagement showing early signs of improvement and management continuing to invest in brand, marketing and technology, the key question for managers is whether the operating leverage Perpetual Asset Management has been banking on for two to three years starts showing up more consistently in earnings, rather than in the kind of single-month swings that have characterised the stock's performance since the FY25 result first surprised the market on cost.