The market loved Premier Investments’ full year result, even though the outlook has been clouded by the impact of the lockdowns in NSW, Victoria and the ACR,
Shares in Solomon Lew’s main retailing venture rose 3% yesterday to $27.63 after Premier revealed a result that was a probably a bit better than thought – a 97.3% jump in consolidated net profit after tax to $271.8 million for the 53 weeks ended July 31.
That was on a more modest but still strong 18.7% rise in total sales for the year to a record $1.4 billion, with like for like (LFL) sales growth of 15.9% (in constant currency).
Final dividend was lifted 10 cents to 46 cents a share, a record, making a total for the year to 80 cents a share.
Like the closing months of the 2019-20 year, Premier once again had to battle the impact of lockdowns and outbreaks.
Across its global networks, it faced temporary government mandated store closures across for 52 of the 53 trading weeks during 2020-21. “All geographic segments in which the Group operates have been affected by these temporary store closures during this financial year,’ the company told the ASX.
“On average, 176 stores were forced into temporary closures in any given week of the FY21 year, adding immense operational complexity across every aspect of the entire business.
“Mandated store closures further increased from late June, with over 400 stores in the final key trading weeks of the reporting period in July 2021.”
And the problems continue with the new rounds of lockdowns in the past two months.
“The Group has had 661 stores temporarily closed across Australia and New Zealand through the majority of the month of August and into early September, representing 56% of the global retail store network.
“Pleasingly, the Group has since progressively been able to re-open over 170 of these stores in the past two weeks.”
Premier said the impact on sales growth from these retail store closures has “been partially mitigated by the Group’s strong global online sales (up 44.6%) and the rebounding of Smiggle Europe.”
“For this seven-week period total global sales were down 9.5%.
“Premier Retail has a proven track record to appropriately manage cost structures across the business in response to ever changing macroeconomic conditions.
The Group’s online business continues to accelerate with an EBIT margin significantly higher than the store network,” the company pointed out.
Premier said its online business saw record online sales of $300.7 million in the July year, up $80.3 million or 36.4% on a previous record 2019-20 (sales: $220.4 million). The online business contributed 20.8% of total group sales for the latest year, up from 18.1%.
That helped its gross margin rise 331 bps to 64.3% delivering a 25.1% increase in gross profit to $929 million.
Premier said the strong sales and the lift in gross profit, together with operational excellence and strong cost control has delivered a record earnings before interest and tax (EBIT) of $351.9 million, up 88.0% from 2020’s $187 million.
In a later briefing Mr Lew made it clear the company was on the lookout for wounded rivals, either to buy or relieve of some of their brands – here or offshore.
