Australian retail giant Coles Myer is trying to renegotiate parts of its clothing supply deal with the Federated Merchandising Group to prevent a repeat of the sales slide and resulting discounting that hit Myer Grace Bros from April, it was reported on Friday.

The Australian Financial Review said Coles is believed to be substantially changing the volumes, product mix and styles Myer Grace has sourced under the contract with US-based FMG – owner of Macy’s and Bloomingdale’s – following the initial poor performance of the brands.

The paper said FMG brands make up 12-15 per cent of the clothing range at Myer Grace, and include labels such as Charter Club, Style & Co, Jennifer Moore and Alfani.

It added that industry sources believe the poor performance is down to a lack of promotion and a misreading of Australian customers' tastes.