Australia's Myer drops 12% as retailer flags sharp slowdown in consumer demand

July 27 (Reuters) - Australia's Myer said on Monday consumer spending slumped in June and July as economic uncertainty and deteriorating sentiment weighed on discretionary purchases, sending shares of the department store operator down over 10%.

Shares of Myer were down as much as 12%, their lowest level since late October 2020.

Trading in the second half was volatile on a month-to-month basis, Myer said, adding that consumer sentiment was dampened by higher fuel prices linked to the Middle East conflict, three interest rate hikes in 2026, slower household income growth, a weaker housing market and household financial uncertainty.

Total sales declined 5.5% in June and 4% in July from the previous month, Myer said.

Preliminary fiscal 2026 total sales rose 0.3% on a pro forma basis, compared with 0.5% growth in fiscal 2025, as lower sales in the Beauty business and fashion chain Portmans offset gains in other categories.

The company, which owns Myer Retail and Myer Apparel Brands, said increased promotional activity aimed at stimulating demand was not sufficient to offset weak underlying consumer spending.

Myer said preliminary fiscal 2026 operating gross profit was between A$1.60 billion ($1.12 billion) and A$1.61 billion ($1.13 billion), down 2.1% to 2.5% on a pro forma basis, reflecting higher-than-planned promotional activity.

($1 = 1.4296 Australian dollars)

(Reporting by Jasmeen Ara Shaikh in Bengaluru; Editing by Mrigank Dhaniwala and Sherry Jacob-Phillips)