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ASX 200 finishes the week with a bang

ASX 200
Credit: Cimexus

The S&P/ASX 200 Index (ASX: XJO) finishes the week with a bang, it rose by 1.5% to 5,965 points.

Big 4 banks jump higher

The big banks of the ASX had one of their best days this year after it was announced that lending laws would be relaxed

The Commonwealth Bank of Australia (ASX: CBA) share price rose 2.8%, the Westpac Banking Corp (ASX: WBC) share price grew by 6.7%, the Australia and New Zealand Banking Group (ASX: ANZ) share price rose 6.2% and the National Australia Bank Ltd (ASX: NAB) share price climbed 6.4%.

Other Australian lenders also had a good day. The Bank of Queensland Limited (ASX: BOQ) share price rose 2.7%, the Bendigo and Adelaide Bank Ltd (ASX: BEN) share price went up 4.75% and the Mystate Ltd (ASX: MYS) share price rose more than 1%.

Despite all of those impressive gains, the banks didn’t claim the top spot in the ASX 200 performance table.

The Whitehaven Coal Ltd (ASX: WHC) share price went up 8% today.

Premier Investments Limited (ASX: PMV)

Premier Investments released its FY20 report for the 52 weeks ended 25 July 2020.

It showed a net profit after tax (NPAT) of $137.8 million, which was growth of 29% compared to FY19.

Premier Retail said it saw like for like sales grow by 7.6% in constant currency terms, with total sales of $1.22 billion, down 4.3%. A highlight was that Peter Alexander sales grew by 16.3% to $288.2 million.

Online sales played a major part in the result for the ASX 200 share because of COVID-19. Online sales of $220.4 million, which went up 48.8%. The online sales in the second half grew by 70% and contributed 25.5% of second half Premier Retail sales. Online sales made up 18.1% of total retail sales over the year. The retail company said online sales continues to deliver a significantly higher earnings before interest and tax (EBIT) margin than the retail store channel.

The Premier Retail underlying EBIT rose by 11.9% to $187.2 million.

Premier said the online business is extremely well placed for the upcoming Black Friday, Cyber Monday and Christmas trading period. Online sales growth has continued into FY21 with online sales for the first six weeks up 92% on the comparable period last year.

The ASX 200 retail share has been one of the loudest voices fighting for cheaper rent from landlords. Premier said that the accelerated swing in customer preference to shopping online has further increased Premier Retail’s focus on each store’s profitability.

Premier Retail has closed 137 stores over the past seven years, which it said demonstrated its willingness to walk away from stores with unrealistic rents that deliver unprofitable sales.  

The ASX 200 company doesn’t want to close stores, it is putting pressure on landlords to lower rent or store closures are inevitable. It has included a $8.7 million channel optimisation expense to potentially close up to 350 stores in Australia and New Zealand. It has also taken the step of impairing some store assets to close stores if suitable rental agreements cannot be reached.

Premier Retail CEO Mark McInnes said: “Premier Retail’s highly profitable online capability and the flexibility of our property portfolio combined with the decisions we have taken in response to COVID-19, leave the group best placed to maximise our position in the accelerating industry restructure.”

Premier’s stake in ASX 200 business Breville Group Ltd (ASX: BRG) had a market value of $1 billion as at 11 September.

The Premier board decided to declare a final dividend of 36 cents per share, bringing the full year dividend to 70 cents per share, the same as last year.

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Motley Fool contributor Tristan Harrison 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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