Premier Investments delivers bumper year, eyes China expansion

Premier Investments delivered FY19 net profit growth of 27.7 per cent to $106.8 million, compared to $83.6 million last year, off the back of strong online sales growth, and record sales at Smiggle and Peter Alexander. 

Smiggle delivered sales growth to $306.5 million, while Peter Alexander saw sales grow to $247.8 million.

Group online sales grew 31.7 per cent over the year to $148.2 million, making up approximately 13 per cent of the group’s record $1.27 billion global sales.

Premier chairman Solomon Lew noted he was pleased the group’s cash flow remained strong while many competitors are failing or struggling.

“We have clear growth strategies in place for each brand – which the team executes on relentlessly, refines continuously and measures fastidiously,” Lew said. 

Premier chief executive Mark McInnes pointed to the NAB recently calling the retail industry in Australia “in recession”, stating that it was clear which retailers are executing good strategies and succeeding, and which are not executing poor strategies and are struggling.

However, while the Commonwealth Bank also posited that spending in the Australian retail space was set to improve, McInnes noted Premier hadn’t felt the effects of increased consumer spending. 

“We’re trading well, but it’s without a macro tailwind,” McInnes said. 

“It feels like it should be good [with] record low interest rates, but it hasn’t come through yet in the economy. We’re cautiously optimistic about the Christmas season coming up – all of the underlying indicators are pointing to a positive Christmas.”

To the board of Premier, the next big opportunity lies in its efforts to partner with Alibaba to crack the China market. 

“It’s a work in progress, and it’s our next really big opportunity,” McInnes said. 

“Importantly, that opportunity isn’t included in our $450 million [annual global retail sales guidance by 2022], it’d be in addition to that.”

Premier announced that Peter Alexander would be opening between 20 and 30 new stores over the next two years, as well as facilitating a material expansion of online-only offers for both it’s children’s sleepwear and P.A. Plus ranges. 

Five new Peter Alexander stores will open during 1H20, in Chatswood West, Hornsby, Eastgardens, and Fashion Spree in New South Wales, and Helensvale in Queensland.

Smiggle’s growth strategy has so far delivered above Premier’s expectations. The stationery brand noted its wholesale offer had far been highly successful, being available through six retailers across seven countries. Potential sales to customers through this wholesale channel could reach between $35 and $45 million in 1h20 – representing a 20 to 25 per cent growth on Smiggle’s 1h19 global retail sales.

Across Premier’s apparel brands, Just Jeans saw like for like sales grow 13.6 per cent – a result McInnes put down to largely understanding the brand’s audience – while Jay Jay’s like for like sales growth of 6.9 per cent eclipsed its total sales growth result of 6.7 per cent.

Portmans also saw like for like sales above total sales, 6.1 per cent compared to 3.5 per cent, while Jacqui E enjoyed like for like sales growth of 3.2 per cent, slight below total growth of 3.3 per cent. 

Dotti saw total sales fall 0.1 per cent, though like for like sales grew 2.2 per cent.

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