In the past month, leading retailers Premier Investments Limited (ASX: PMV) and OrotonGroup Limited (ASX: ORL) have seen a rally in their share prices of around 14% and 26% respectively.
For comparison, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is essentially registering a flat result over that one-month time period.
With the all-important Christmas trading period approaching and with both companies having just held their respective annual general meetings (AGM) now could be an opportune time to assess the potential outlook for these two stocks.
Premier Investments
- Owns a suite of popular brands including Peter Alexander, Smiggle, Portmans and Just Jeans
- The Smiggle brand in particular has been singled out for its international growth potential with the group already operating 24 stores in the UK and with plans for 200 stores and revenues of $200 million within five years
- The company has a very strong balance sheet with cash of $282 million at June 30 and a stake in appliance manufacturer Breville Group Ltd (ASX: BRG) valued at around $230 million
- Underlying group profit before tax increased 12% in 2015 and dividends totalling 51 cents per share fully franked were paid
With double digit earnings growth expected in the current financial year, Premier Investments' shares could continue to perform well from here.
OrotonGroup
- The group is recovering from some strategic blunders with a renewed focus on its luxury handbag brand Oroton and the roll-out of GAP stores
- The group has 77 stores – 71 for Oroton including 15 international stores and 6 Gap stores
- Initiatives include the elimination of most discounting and markdowns, the addition of higher price point products, as well as a new store concept with has created a more luxury shopping environment
- Further signs that the company is in the midst of a turnaround was news that September like-for-like sales growth was strongly positive for the first 7 weeks of the current financial year
With signs suggesting that OrotonGroup's business has stabilised and is starting to grow once more, the coming Christmas season will provide an important assessment point which will likely determine the near-term direction for the stock.
