The Premier Investments Limited (ASX: PMV) share price will be on watch this morning following the release of its half year results.
How did Premier Investments perform in the first half?
For the six months ended January 25, Premier Investments delivered record total sales of $732.1 million. This was a 7.6% increase on the prior corresponding period and 4.3% higher on a like for like constant currency basis.
This was driven by record sales from both its Smiggle and Peter Alexander brands and a significant jump in online sales. Smiggle delivered an 8.3% increase in sales to $193.7 million and Peter Alexander's sales lifted 11.1% to $144.8 million. Online sales grew 28.4% to a record of $97.2 million.
In respect to earnings, the retail side of the business delivered earnings before interest and tax of $126.1 million. This was an increase of 10.7% on the prior corresponding period.
Overall net profit after tax for the half was up 12.2% on the same period last year to $99.6 million. Diluted earnings per share came in 12.1% higher at 62.6 cents.
Pleasingly, Premier Investments' cash flow was strong. It reported a 41% increase in net cash generated to $133 million.
Record interim dividend.
Despite the uncertainty being caused by the coronavirus outbreak globally, the Premier Investments board has declared a record fully franked interim dividend of 34 cents per share. Management advised that this reflects the board's assessment of its results, strong balance sheet, and long-term strength.
Premier Investments Chairman, Solomon Lew, said: "During the reporting period, Premier traded through Brexit uncertainty in the United Kingdom, protests in Hong Kong, devastating bushfires in Australia and a continuing fall in the Australian dollar. These pressures claimed many other retail businesses across Australia and the globe."
"Despite these factors, Premier delivered record results – this is a testament to the strategy we put in place almost a decade ago and the relentless execution of management against that strategy. Premier today announces record sales and profit with exceptional cashflows allowing us to provide the Group with great flexibility in these uncertain times," he added.
Coronavirus update.
In respect to its supply chain, management revealed that it has been able to secure the majority of its inventory for the second half with only minor increases in supply chain costs.
However, outside this, the company advised: "It is impossible to predict or forecast the nature and impact of COVID-19 on consumption and supply chains in each of the countries we operate. In this environment our high quality management team are focussed, flexible and nimble to respond to all unfolding scenarios."
The company also warned that its businesses across the world have been experienced weaker sales because of the outbreak. It acknowledged that this could lead to narrower gross margins if it attempts to clear inventory.
It added: "We have detailed cost and supply chain mitigation strategies underway which will be deployed depending on the way in which the challenges we face evolve. There could be significant hardship right across our business. We have been transparent in describing the ever evolving impacts on our group. At this stage it is not currently possible to estimate the extent of these impacts on the group's current and future earnings."
