Demand for designer brands drives record retail earnings for Premier Investments

Premium pyjama brand Peter Alexander posted sales of $478.9 million, up 11 per cent from a year earlier and a massive 93.3 per cent increase on FY19 despite the chain operating 10 fewer stores than that period.

Upmarket stationery supplier Smiggle’s global sales of $319.8 million were up 22.4 per cent for the year, 4.3 per cent higher than pre-COVID FY19, when it also had 51 more stores in its network.

“Notwithstanding the challenging macroeconomic environment and the cost-of-living pressures faced by the community, our brands are focused on delivering wanted products and value for our customers,” says Premier Retail’s interim CEO John Bryce.

“We maintain a relentless focus on product and channel optimisation whilst working with the board to maximise growth opportunities for each of our brands.”

The solid result from each division, including the company’s Apparel Brands division which includes Portmans, Just Jeans, Jay Jays, Jacqui E and Dottis, potentially firms up Premier Investments’ plans to split the company into three via a demerger proposal mooted in August.

During the year, Premier Investments secured an agreement with a wholesale partner to open up to 60 freestanding Smiggle stores in the UAE, Qatar, Kuwait, Oman and Bahrain as part of a global expansion of the brand.

The agreement, which will be rolled out over the next decade, is part of a major rebuilding of the brand following extensive store closures during the pandemic.

Premier says the Smiggle business has opened the first half of FY24 strongly, particularly in the ‘key back to school’ northern hemisphere markets in Europe and its wholesale channel in the Middle East.  

Premier Investments is also investing heavily in its Peter Alexander division with six new stores opened in FY23, and all of them reported to be trading ‘significantly ahead of expectations’.

The company plans to open six new Peter Alexander stores in the current half and has identified between 20 and 30 opportunities for new and larger format stores in Australia and New Zealand over the near term.

“As part of these offshore expansion plans, in November 2023 the brand is set to launch with a global cross border ecommerce platform provider to grow the brand across 35 countries,” says the company.

“Supported by digital marketing programs in select countries, this platform will allow international customers a simpler and faster online shopping experience.”

Premier says its Apparel Brands division, which lifted sales 4.6 per cent to a record $844.8 million in FY23, is well positioned to deliver future growth.

Online sales across the company’s retail operations in FY23 were up 6.3 per cent in the second half compared with a year earlier, signifying normalised growth in comparison to those that were previously impacted by COVID lockdowns.

“The online channel continues to deliver significantly higher EBIT margin than the retail store channel,” says the company. “For each of the seven brands, the most viewed store window and the largest store is the brand’s online channel.”

However, Premier Investments says customers ‘continue to value’ the group’s 1,100 bricks and mortar stores across six countries.

“Landlords recognise the strength of Premier’s seven iconic brands and continue to reach mutual agreement with the group,” the company says. “With the appropriate landlord support, opportunities exist for new stores and to refresh, upgrade and/or expand existing stores across all brands over the next three years.”

Premier Investments posted record group revenue of $1.63 billion in FY23, up 10.7 per cent, to deliver an adjusted net profit of $278.5 million – up 6.4 per cent.

The group’s bottom-line statutory profit of $271.07 million is down 5 per cent due to equity accounting provisions relating to the company’s shareholding in Myer Holdings (ASX: MYR).

“Premier has once again delivered for shareholders,” says Premier Investments chairman Solomon Lew.

“Our wholly owned and operated retail brands under the banner of Premier Retail have again outperformed the market, delivering both record sales and record EBIT results.”

Premier Investments is paying a record final dividend of 60c per share, taking full year dividends to $1.30 per share, up 4 per cent.

Lew says the dividend payment underscores the company’s ‘confidence in the strength of the business and its future prospects’.

Lew also notes that Premier Investments has delivered more than $500 million in fully franked dividends to shareholders over the past three years.