Premier bucks dormant trend to post positive
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.
Frequently Asked Questions about this Article…
Premier Investments reported a net profit of $46.5 million for the six months to January 26, a 20.7% increase on the prior corresponding period. Group revenues rose 2.6% to $460.3 million. The company also declared a fully franked dividend of 19¢ a share.
Premier said its transformation strategy is paying off: sales and gross profit margins are up, costs are well controlled and working capital usage has significantly improved. Management highlighted strong online growth and improvements across several brands as drivers of the result.
Premier recorded 'exceptional' online sales growth of 51% for the half-year. For investors, rapid online growth can point to improved sales mix, lower channel-risk and potential for higher margins as the business invests in its digital capabilities.
Smiggle showed strength—especially in Singapore where eight of its top 10 stores were located—and Portmans and Dotti delivered material turnarounds in top-line performance. By contrast, like-for-like sales were dragged down by Jay Jays and, to a lesser extent, Just Jeans. Premier also owns Peter Alexander.
Premier said it will continue focusing on raising sales in its core brands, improving gross margins and investing in online. If executed successfully, these priorities could underpin future revenue growth and margin improvement.
Jacqueline Fernley of Wilson HTM noted Premier's gross margin performance was healthy, but like-for-like sales remain negative despite improvement from the previous year. She pointed to weaker performances at Jay Jays and Just Jeans as the main drag.
The market responded positively: Premier’s shares closed up 15¢ at $7.85 after the result was announced.
Investors may want to watch follow-up indicators the company highlighted: continued online sales momentum, improvements in like-for-like sales across brands (especially Jay Jays and Just Jeans), gross margin trends, and whether the company maintains disciplined cost and working capital management.
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