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Premier Investments (ASX: PMV) notched outstanding retail sales results in FY18 with a solid contribution from online, but a revaluation of one of its brands ultimately drove profits southward.
Taking stock of an increasingly competitive apparel retail sector in Australia and New Zealand, an impairment expense of $30 million for Just Group's casual wear unit made all the difference in what would have otherwise been a strong statutory result.
The group also incurred $1.5 million in expenses in relation to its spat with Myer, including preparation for legal action.
In an environment where retailers continue to discount deeper to remain competitive, Premier Retail's sales were up 8.2 per cent to hit a record level of $1.18 billion, while key brands Smiggle and Peter Alexander saw sales upticks of 22.7 per cent and 14.5 per cent respectively.
Online sales shot up 65.3 per cent to $112.5 million, signifying exponential growth for a channel that had almost no sales in 2011. The strategy set in that year was to reach online sales of $100 million by 2020, but that has been achieved two years ahead of plan.
Premier chairman Solomon Lew is positive about the delivery of another very strong result.
"Premier Retail today announced a record $1.18 billion in sales with record underlying EBIT of $150.1 million, up 10.3% on FY17," he says.
"This year's result was driven by the continued growth of Smiggle and Peter Alexander as well as positive momentum within the apparel brands.
"I am delighted to report that the online business surpassed our original 2020 target of $100 million more than two years ahead of plan, delivering sales for the year of $112.5 million up 65% on FY17."
Today the group has also announced a multi-channel accelerated growth strategy for Smiggle, targeting both the $450 million in global Smiggle retail sales by FY20 and setting up pathways for significant growth beyond FY20.
Following "stand out successes" for Smiggle's online business in the UK and concession stores with Selfridges and Harrods, the company is reviewing the nature of its retail channel entry into the Netherlands and Belgium, with a commitment to enter continental Europe in FY19. This could also include more penetration into France, Spain, Italy and Germany.
In addition to Smiggle's 347 stores worldwide, the European expansion plan contemplates 40-50 concession stores as well as complementary online business.
Lew also mentions Peter Alexander's 2020 growth plan targeting $250 million in annual sales by FY20 is also progressing well ahead of expectations.
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