Premier bucks dormant trend to post positive

Premier Investments has defied a subdued retail climate to post a strong net profit for the first half, amid a continuing transformation strategy.

The group, which owns retailers Just Jeans, Jay Jays and Peter Alexander, reported net profit of $46.5 million for the six months to January 26, a 20.7 per cent increase on the previous corresponding period. It declared a fully franked dividend of 19¢ a share.

"We acknowledge that there is still more work to be done before we see the brands all operating at full potential, but we are certainly pleased with the progress to date," Premier chairman Solomon Lew said in an earnings call on Thursday.

"Sales are up. Gross profit margins are up. Costs are well controlled. And working capital usage has been significantly improved."

Revenues from all brands rose 2.6 per cent to $460.3 million. The company recorded "exceptional" online sales growth of 51 per cent, and also saw strong performances in its stationery chain, Smiggle, in Singapore, with eight of its top 10 best-performing stores there.

Premier said it would continue to focus on raising sales in its core brands, improving gross margins and investing online.

Jacqueline Fernley, head of research at Wilson HTM Investment Group, said while Premier's gross margin performance was healthy, its like-for-like sales growth, which has remained negative, was disappointing despite an improvement from the year before.

"It's clear that's been dragged down by the performance of Jay Jays and, to a lesser extent, Just Jeans, whereas we've seen quite a material turnaround in top line for Portmans and Dotti," she said.

"That's certainly what you would expect for a business with some significant change and that's requiring quite a material turnaround in a number of its brands."

Premier closed up 15¢ at $7.85.