Melbourne-based retail group, Premier Investments (PMV) has lifted interim dividend one cent a share to 20c a share after reporting a 12% rise in net profit for the first half of 2012-13.
As a result of that, the company’s shares added more than 9% in trading yesterday to close at $8.80. It was one of the biggest rises in a market which was lower and drifted for all of yesterday.
Group profit before tax was up 8.7% to $70.1 million from the company’s retail chains and its investment in Breville and a cash pile of more than $300 million.
Group net profit after tax was $52.1 million, up 12.1% on the first half of 2012-13.
Retail sales rose 5.3% to $468.4 million and like-for-like sales jumped a very solid 4.4% as six of the seven brands in the group achieved sales growth.
Earnings before interest and tax from Premier’s retail operations, which comprise Smiggle, Peter Alexander, Just Jeans, Jay Jays, Dotti, Portmans and Jacqui E, rose 9.2% to $61.5 million as stronger sales and lower costs offset weaker gross margins.
The company said the higher result came from strong demand at the retail chains Smiggle and Peter Alexander chains, which offset weak sales at Jay Jays.
Premier said the core Just Jeans chain saw positive sales for the first time in several years and the Jay Jays chain saw sales growth in the second quarter.
Just Jeans returned to positive growth for the first time in several years and Jay Jays, which is in turnaround mode, returned to growth in the second quarter. But the stars were Smiggle where sales jumped 15.7% and Peter Alexander were sales surged 23.3%.
PMV 1Y – Premier’s retail business starting to grow and grow
Premier also booked an equity accounted profit of $8.3 million from its stake in appliance maker Breville, which was valued in the market at $318.8 million (but is in Premier’s books at just over $188 million).
Premier started equity accounting its share of Breville’s profits after appointing a new director to the board in the second half of 2013.
However, investment earnings fell 5.7% before tax, due to lower interest earnings on cash holdings of $318 million.
Premier Chairman Solomon Lew said in yesterday’s statement: “Management continues to focus on transformation of the Premier Retail portfolio through a combination of core business improvement initiatives and growth initiatives.
“We are confident that unlocking the value of uniquely positioned brands like Peter Alexander and Smiggle will continue to deliver returns for our shareholders.
“Premier Directors have increased the interim dividend to 20 cents per share, reflecting the strong result of Premier Retail and signalling the strength of Premier’s balance sheet. We continue to focus on growing shareholder wealth by optimising Premier’s current business investments and seeking new opportunities.
“We were pleased to open our first Smiggle UK store at Stratford last month and we expect to have a further 8-10 new stores operating in the UK by July 2014. We also expanded our Peter Alexander network with five new stores and commenced our concession store operations in Myer in February,’ Mr Lew said.
The key takeaway from this result is that all the moaning and groaning about the internet and its dangers and the need for taxes on purchases from offshore under $1,000 from Mr Lew and his retail boss, Mark McInnes, has been shown to be nothing buy hot air.
Some of Premier’s chains are booming – and the company is moving offshore. Others, the main Just Jeans and its offshoot Jay Jays, seem to have turned the corner and are in recovery.
But you can’t really complain (in fact you moans would be laughed out of court) about unfair imports when you have two chains in Smiggle and Peter Alexander growing sales by 15.7% and more than 23% respectively – and when group same store sales in the half year was a near industry peak of 4.4%?
