AAP Finance

Premier defies Brexit woe, retail downturn

By AAP Newswire

Shares in Premier Investments have surged more than 22 per cent to a fresh 12-month high as a stellar sales performance by Peter Alexander and Just Jeans helped the company counter a wider retail malaise.

The Solomon Lew-chaired conglomerate increased its full-year net profit by 27.7 per cent to $106.8 million as total income rose by 7.3 per cent to $1.28 billion in the 12 months to July 27, a figure that would have been even higher were it not for $26 million pre-tax charges against its UK Smiggle stores.

Premier said it brought forward depreciation charges as it breaks lease options amid Brexit uncertainty.

"Recent political developments in the UK, including the appointment of Boris Johnson as Prime Minister, have added further political and economic uncertainty to an already distressed retail and landlord environment," the company said on Friday.

Premier's retail chief executive Mark McInnes said the company's overall result was particularly impressive considering rival retailers had struggled during a wider economic slump.

"Companies with good strategies are doing well... companies with poor strategies aren't doing well, and that's the nature of the market," Mr McInnes said.

Mr McInnes said he was cautiously optimistic the company was well-placed to cash in on the all-important Christmas sales season, while strong father's day sales and back-to-school campaign in UK and Ireland had given it a boost in the first few weeks of FY20.

He said the company is, however, yet to see any benefit from the Reserve Bank's dual rate cuts in June and July, or the federal government's recent tax stimulus.

"It feels like (consumption) should be good... record low interest rates ... house prices going up..." Premier Retail chief executive Mark McInnes said on Friday.

"But it doesn't seem like it's coming through to the economy."

Nonetheless, the company on Friday increased its final dividend by four cents to 37 cents, fully franked.

Shares in the company were up 22.34 per cent to $19.23 by 1327 AEST, the highest since September last year and approaching the company's all-time peak of $20.16 hit that same month.

Revenue from Smiggle hit a record $306.5 million as sales in Asia remained strong - though the stationery chain's 4.6 per cent sales growth was well down on 22.7 per cent in FY18.

Premier still reaffirmed Smiggle's growth strategy target of $450 million revenue by the end of 2022, with the brand successfully launching into South Korea, Thailand, Indonesia, Philippines, United Arab Emirates and Canada since the end of the financial year.

Mr Lew said expansion into China remains "a work in progress" as talks with the likes of Alibaba continue.

The company's Peter Alexander sleepwear chain lifted its full-year sales 13.3 per cent to $247.8 million to almost reach its 2020 growth target a year ahead of schedule.

Total sales at Premier's apparel range - which includes Just Jeans, Jay Jays, Dotti and Portmans - grew by 6.9 per cent to $716.7 million following a brand repositioning, with like-for-like sales increasing by 7.8 per cent.

The company had written down the value of Just Jeans, Jay Jays and Dotti by $30 million in FY19 before refocusing its sales approach last September.

This included closing unprofitable stores due to "unrealistic" rents, with Premier's flagship Just Jeans store in Melbourne's Chapel Street one of 26 apparel stores closed during the year.

Premier Investment's 27.4 per cent stake in Breville Group reaped $18.9 million in associate income after the home appliance manufacturer increased its full-year profit by 15.2 per cent.

PREMIER INVESTMENTS FY PROFIT CLIMBS

* Revenue up 7.3pct to $1.28bn

* Net profit up 27.7pct to $106.8m

* Final dividend up by four cents to 37 cents, fully franked