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Premier Investments Limited jumps 8% after results: Is it a buy?

What: After today’s very impressive full-year result for retailer Premier Investments Limited (ASX: PMV), management remains upbeat about future prospects. While the S&P/ASX 200 Index (INDEXASX: XJO) is currently trading down 0.4 %, the shares of Premier Investments have risen strongly to be 8.24% or 81 cents higher at $10.64.

Highlights of the result:

To avoid confusion, the results are shown below for the group as a whole (Premier Investments) and the retail division (Premier Retail)

Group Profit:

  • Underlying net profit before tax of $106 million – up 10.3%
  • Reported net profit after tax of $73 million – up from $69.3 million (after adjusting for a reclassification).
  • Final fully franked dividend of 20 cps (FY2013 19cents) – full-year dividend 40 cps.

Premier Retail contribution to Premier performance:

  • Underlying profit before tax of $87 million – up 13.4%
  • Sales of $888.4 million – up 6.2%
  • Like-for-like sales growth – up 4.7%
  • Underlying EBIT of $92.8 million – up 10.9%
  • Underlying EBIT marginup 44 basis points to 10.4%

These results far outperform similar retail investments and notable comparison against the results released less than a week ago by Myer Holdings Ltd (ASX: MYR), which revealed weak revenues and a fourth year of falling profits.

So What?

The outlook commentary was extremely positive. Premier’s Chairman, Mr. Solomon Lew said: “Premier will continue to deliver sustainable long-term growth for shareholders by both optimising the value of our core retail brands and by unlocking the value of our uniquely-positioned growth brands, Smiggle and Peter Alexander.”

Smiggle attained total sales in excess of $100 million ($105.2) for the first time and grew sales at 17.4%. The main driver was Smiggle UK which was only launched in the UK in February 2014. It now has eight stores operating, with a further 10 to be opened before Christmas and the opportunity is seen as “substantial”. Management envisages up to 200 stores over five years in the UK, with sales in excess of $200 million.

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Motley Fool contributor Mark Woodruff does not own shares in any of the companies mentioned in this article.

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