Myer, one of Australia's leading department store chains, reported an 18.5% decline in net profits for the first half of the fiscal year, down to $42.4 million.

The company attributed approximately $8 million of this decline to operational issues stemming from the implementation of a new automated warehouse at its national distribution center in Ravenhall, Victoria, which officially became operational in August 2022 after a two-year delay.

The automated system encountered significant implementation challenges, resulting in clothing inventory becoming trapped and therefore unavailable for sale during a crucial trading period leading up to Christmas.

Myer chief executive Olivia Wirth confirmed that a disproportionate amount of the company's exclusive brands was affected by the warehouse issues, leading to substantial disruptions in fulfilling online orders and restocking physical stores, particularly impacting locations in Victoria and Tasmania.

As a result of these complications, Myer faced additional costs amounting to $5 million, with ongoing efforts to resolve the automation and integration issues still in progress.

The warehouse problems also resulted in an estimated $12 million in lost sales, contributing to a 14.3% decline in earnings before interest and tax (EBIT), which fell to $102 million.

The company's share price experienced a decline on the day of the financial report, falling by 1.1% to close at 75 cents but later stabilized through the trading session.

Under Wirth's leadership, which began in June 2022, Myer has implemented several organizational changes including a restructuring of internal departments and leadership roles.

A strategic review has been completed, and initiatives are in place to enhance the online shopping experience and to refocus the apparel offerings to attract a younger demographic.

Additionally, Myer has finalized the acquisition of five brands from Premier Investments, including Jay Jays and Jacqui E, with intentions to integrate these brands into its loyalty program, Myer One, which is instrumental in driving sales, as loyalty members account for 80% of transactions.

Despite the challenges, Myer reported an overall sales growth of 0.8%, although this was overshadowed by store closures and other operational setbacks.

Online sales did show a positive trend, increasing by 4.8%, and the number of active customers reached 4.6 million, reflecting a 6% uplift.

The company has also undertaken debt refinancing measures, securing a $150 million debt facility from two major banks, the Commonwealth Bank and NAB, to support its financial position amidst these operational challenges.