The Premier Investments Limited (ASX: PMV) share price has risen by 5% in early trade in response to its half-year report.
Premier Investments is the retail company behind brands like Smiggle, Peter Alexander, Just Jeans, Jay Jays and Dotti.
Below are some of the highlights compared to the prior corresponding period.
Premier's total revenue increased by 6.82% to $634 million. Smiggle's global sales grew by 26.7% to $170.7 million, which was driven strong like-for-like (LFL) growth and the opening of 35 new stores. Peter Alexander's sales grew by 15% to $114.4 million, this was also helped by good LFL growth with 12 new stores being opened. LFL sales across the group, in constant currency terms, showed a growth of 2.4%
The company disclosed that online total sales grew by 71.2% to $56 million. Originally, Premier had a target for online sales of $100 million by 2020. Now management expect to achieve this in the 2018 calendar year, two years ahead of schedule.
Premier reported that underlying earnings before interest and tax (EBIT) grew by 10.2% to $102.5 million, the EBIT margin improved to 16.3% from 15.8%. Management were keen to point out that this result means first-half EBIT and the EBIT margin have grown for six consecutive years in the critical summer season.
The reported net profit after tax (NPAT) increased by 9.4% to $78.6 million and the earnings per share (EPS) grew by 9.2% to 47.47 cents per share. Management increased the dividend by 11.5% to 29 cents per share.
Management said that this result should be taken in context with the significant external headwinds in the apparel sector, with retailers continuing to discount deeper and for longer to remain competitive.
The business is maintaining its focus on keeping a good inventory position. Management said that costs continue to be well controlled despite structural inflationary pressure. The group's retail gross margin decreased to 63.2% from 64%. However, the employee expenses as a percentage of sales decreased to 22.8% from 24% and rent decreased to 18.1% from 18.4%.
Premier ended the half with $185.5 million free cash on hand. Its investment in Myer Holdings Ltd (ASX: MYR) was valued at $54.8 million whilst the market value of its Breville Group Ltd (ASX: BRG) holding was $447.4 million at 14 March 2018, with the equity accounted value on the balance sheet valued at $221.3 million.
Premier's Chairman, Mr Solomon Lew said "The Premier Board and Premier's executives have consistently set the strategy and rigorously implemented the strategy to deliver superior returns to shareholders. We are delighted that, from 1 July 2018, the Australian Government will implement the GST on all online international sales. This will benefit Premier and all Australian retailers (shareholders, employees and related industries) who now will be able to compete on a level playing field."
Foolish takeaway
I thought this was a solid result, as does the market. I think it underpins Premier as one of the best retail businesses on the ASX and there could be plenty more growth to come with Smiggle's global growth.
