Peter Alexander, Smiggle Spurs Premier Profits
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As sales of some of its main Australian brands slowed in the closing months of 2016-17, Premier Investments was saved by another solid performance from what are emerging as its two growth engines - the Smiggle and Peter Alexander chains.
So much so that the performances of both chains here and offshore helped Premier report a full-year net profit of $105.1 million, up just 1.2%.
Like for like sales growth slowed to just 1.1% for the full year after being ahead 21% at the half way mark confirmation that the company really stagnated or went backwards in the six months to the end of July.
The result for the year ended July 29 missed analyst estimates of $111.7 million as weak sales of clothing brands Portmans, Dotti, Jacqui E and Jay Jays offset strong growth at Smiggle, Peter Alexander sleepwear stores and in online sales.
And in another sign of a second half slow down, the Solomon Lew-backed group reported sales revenue growth of 3.98% to $1.1 billion, after being up 7.1% for the first half.
Investors cottoned onto the weak overall effort - especially in the second half in Australia - and marked the shares down 2.5% to $13.40.
Underlying earnings rose 7.3% to $136 million, beating expectations of about $130 million (but this measure was up more than 10% at the half way mark), while the company lifted its final dividend by 2 cents to 27 cents a share, fully franked.
That was after the first half dividend was lifted 3 cents a share to 26 cents from 24 cents a share. The total for the year is 53 cents a share.
"Premier ... has again delivered a very strong performance with solid growth in sales and underlying earnings despite the very difficult retail conditions," chairman Mr Lew said in a statement.
But not so Myer where Premier owns more than 10% and is wearing a loss of 37% thanks to Myer’s sharp fall off the back of a second half slide as well.
Sales for the Smiggle chain jumped 28.8% to $238.9 million, helped by the opening of 58 new stores globally and solid like-for-like sales globally, while Peter Alexander sales were up 14% at $190.9 million, with 11 new stores.
The online business also significantly outperformed the market, with sales up 44.3% at $68.1 million, it said. As a result of that strong growth, Premier says it expects to exceed its annual online sales target of more than $100 million earlier than the originally planned 2020.
With that sort of growth - and the weak performance from its older chains, it's no wonder Premier will put the foot down at Smiggle and its offshore push, while spending more at Peter Alexander.
The slower performing chains will not get the same attention, meaning they will go backwards - and it wouldn’t surprise to some some restructuring in this area or even asset sales.
Premier said it planned to open Smiggle stores next year in the Netherlands and Belgium, which together have a personal stationery market worth $US1.7 billion. It expects to have 40-50 stores in these two markets over the next four to five years.
It is targeting global revenue of more than $400 million for Smiggle by 2019-20.
At the end of the financial year, Smiggle had 297 stores across Australia, New Zealand, Singapore, England, Scotland, Wales, Northern Ireland, Malaysia, Hong Kong and the Republic of Ireland.
More than 60% of Smiggle sales now come from outside Australia, with the UK becoming its biggest market in the July half of the financial year.
Premier also outlined plans to grow Peter Alexander, targeting revenue in excess of $250 million by 2019-20, through opening 40 new stores over the next three years, upgrading 12 existing stores and extending its bath and body, childrens' wear and plus size offerings.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.