Specialty fashion retailer Premier Investments Limited (ASX: PMV) is up about 21% over the past three months and set a new all-time high of $9.98 this week. On the back of a strong first half, the company is showing how retail trade is improving and that it can grow its business.
It operates fashion brands such as Just Jeans, JayJays, Dotti, Portmans and Jacqui E that can be seen at many shopping centres. Its chairman, Solomon Lew, has been a retailing leader for many years and is the driving force behind the company’s growth.
Revenue was stable during the GFC, yet has pulled back slightly over the past two years. Part of that could be explained as slow trade before the Australian economy started to recover. Interim results from the first half of FY2014 tell a different story.
The company had a 12.1% gain in net profit, mostly coming from its retail segment. Interim earnings per share were up similarly. The stock’s dividend yield is 4%.
It is making improvements to its supply chain network by creating a new Australian distribution centre, which should be fully complete in FY2014, as well as making changes to its New Zealand supply chain. This will produce annual savings and improve earnings, especially as it expands its multi-channel sales for online retail. Online sales have grown by double digits over the half year.
One business initiative that has made the news recently is its entry into the UK market with its Smiggle brand stationery stores. Already there are about 122 stores in Australia. There is potential to create a UK store network of about 200 stores over the next five years. The company projects that it could add more than $200 million in sales to the group.
I believe retail trade in general will improve as the economy grows more. Because Premier Investments has an expanding brand that is not fashion related, I think it has good product diversification and potential.
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