Why the Premier Investments Limited share price is rising today

Credit: Kira

The share price of retail conglomerate Premier Investments Limited (ASX: PMV) is continuing to climb higher this week, with the group expected to release its interim profit result later this month.

The business behind the Just Jeans, Jay Jays, Smiggles and Peter Alexander retail stores among others, continues to reward investors through a combination of same-store sales growth and new store openings across some of its most popular brands.

The group also retains a strong balance sheet with cash on hand of $281 million and a large stake in kitchen appliance retailer Breville Group Ltd (ASX: BRG).

That stake is is valued at more than $200 million and Breville itself posted better-than-expected half-year profit results in February with the stock up 29% over the past six months.

However, the key growth driver for Premier Investments remains its Smiggles children’s stationery stores that are likely to have enjoyed a bumper Christmas period.

The colourful school equipment proving a hit with parents and children in Australia and the UK alike, with sales up 26% in the most recent period and some great expectations for performance over the six months ended December 31 2015.

Smiggles is expanding aggressively into the UK with around 60 stores to be open by the end of this financial year and operating performance reported to be strong. In the UK Premier Investments aims to have 200 Smiggles stores open and sales of $200 million plus per annum within the next five years.

Retailers in general appear to be enjoying the effects of the Australian dollar’s recent rebound as they are often net importers and a stronger dollar means cheaper import costs and better margins. Shares in Harvey Norman Holdings Limited (ASX: HVN) and JB Hi Fi Limited (ASX: JBH) are both up around 10% over the last month, although Premier Investments is up around 19% over the same period.

Its growth prospects, strong balance sheet and excellent management team mean Premier Investments should be near the top of all investors’ watch lists.

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