Melbourne-based investor, Premier Investments reported a sharp rise in first half profit yesterday and has maintained its guidance for the full year, despite warning that the retail trading environment remains difficult.
The company, which grew last year by stalking and then snaring control of Just Group, said net profit reached $49.18 million for the half year ended January 24, up from $21.1 million from in the previous corresponding period.
The boost for the Solomon Lew-controlled Premier came from Just, despite sluggish sales and a lower profit at the clothing retailer.
Just’s Australia and New Zealand sales for the six months was $432 million, up 1.8%, but earnings before interest, tax, and amortisation fell 13% to $56 million, with losses on an expansion in California having an impact.
Premier’s overall group revenue for the first half was $455.33 million, up from $32.47 million previously.
Just is looking at closing the three-store chain of Peter Alexander stores in California less than a year after the first store was opened because of the deep recession in US retailing, especially for clothes.
The poor performance of Peter Alexander in the US dragged down pre-tax earnings in the half by $3.8 million and left overall earnings for the Group off 19% in the half year to $52 million.
Despite some of the gloom in the result and associated commentary, Premier shares rose, ending up 35c, or nearly 10% at $4.03.
Mr Lew said that despite the global financial crisis "strong retailers will be able to trade through the downturn and weather the storm.
"We appeal to a diverse demographic of customers across our brands and we think we are in a good position," Mr Lew said. "The Just Group team is doing an admirable job despite tough trading conditions."
Just owns the Portmans, Just Jeans, Peter Alexander, Jay Jays, Dotti, Jacqui E and Smiggle brands and has a network of more than 900 stores.
Premier said the remainder of its first half earnings were largely due to interest earned from cash on deposits and it had a cash balance of $337 million at January 24, excluding Just Group debt.
That cash might find a home elsewhere, with the company hinting at future plans.
It said it is looking to "pursue acquisition opportunities in light of the global financial crisis."
It has been mentioned in the same breath as Pacific Brands, but not yesterday.
Premier sees a difficult retail environment for the remainder of 2009 in Australia and New Zealand and is maintaining the November guidance of Just’s annual EBITA to be approximately 10% down on 2008, excluding transaction costs related to the Just takeover.
Premier declared an interim dividend of 37c a share, including a special dividend of 20c (11c a share interim in 2008) and it has gone for a dividend reinvestment plan (DRP) to allow shareholders to reinvest a portion of their dividend without incurring brokerage or other transaction costs. That also enables Premier to conserve cash.
