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Premier Investments delivers record profit in FY 2019

The Premier Investments Limited (ASX: PMV) share price could be on the move today after the retail conglomerate released its results for FY 2019.

How did Premier Investments perform in FY 2019?

In FY 2019 Premier Investments reported a 4.2% lift in like-for-like sales and a 7.5% increase in total global sales to a record of $1.27 billion.

Once again, the Smiggle and Peter Alexander businesses performed strongly. They achieved record sales of $306.5 million and $247.8 million, respectively, during the 12 months. This was supported by a 6.9% lift in Apparel Brands sales to $716.7 million despite the closure of 26 unprofitable stores.

Another key driver of growth was its online business. The company grew online sales for the year by 31.7% to $148.2 million. This means the online business contributed 13.4% of the sales in countries and brands with a transactional website, up from 11% in FY 2018.

As the online business is highly profitable with an EBIT margin significantly higher than the group average, this underpinned strong earnings growth in FY 2019. The Premier Retail business delivered underlying earnings before interest and tax (EBIT) of $167.3 million, up 11.5% on the prior corresponding period.

This ultimately led to the company reporting a 10.8% increase in underlying net profit before tax to a record $177.6 million and a 27.7% lift in reported net profit after tax to $106.8 million.

Balance sheet.

Over the 12 months Premier Investments generated net cash of $123.3 million, up 32.3% on FY 2018. Which allowed the company’s board to declare a record fully franked final ordinary dividend of 37 cents per share, taking its full year dividend to a fully franked 70 cents per share. This was a 12.9% increase on FY 2018’s dividends.

At the end of the period its investments in Breville Group Ltd (ASX: BRG) and Myer Holdings Ltd (ASX: MYR) were estimated to be worth $691.7 million and $46.9 million.

Management commentary.

The company’s chairman, Solomon Lew, appeared to be very pleased with the result.

He said: “The Premier team continues to deliver outstanding returns for shareholders. We have clear growth strategies in place for each brand – which the team executes on relentlessly, refines continuously and measures fastidiously. Capital continues to be invested in growth opportunities with great discipline. In 2019, the Premier portfolio outperformed with strong growth in all our apparel brands, continued Online sales growth ahead of market, record Smiggle global sales and record Peter Alexander sales.”

No guidance was provided for the year ahead, but management appears confident that it will continue its positive form. It revealed that it plans to open 20 to 30 new Peter Alexander stores over the next two years and expects its new Smiggle Accelerated Global Growth Strategy to be a key driver of growth over the coming years after a successful start.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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