Premier Investments (ASX:PMV) share price on watch after record profit result

The Premier Investments Limited (ASX:PMV) share price will be on watch today after announcing a record profit result despite COVID-19…

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Premier Investments Limited (ASX: PMV) share price will be one to watch this morning following the release of its full year results for FY 2020.

How did Premier Investments perform in FY 2020?

For the 12 months ended 25 July 2020, the retail conglomerate posted a 2.1% decline in revenue to $1.25 billion.

This was due largely to store closures during the pandemic and offset slightly by a 48.8% jump in online sales to a record of $220.4 million. The Peter Alexander brand also delivered record sales, up 16.3% to $288.2 million for the year.

It was thanks partly to its higher margin online sales that Premier Investments was able to grow its earnings strongly during the 12 months despite its overall sales decline. The company recorded an impressive 29% increase in net profit after tax to $137.75 million.

This allowed the board to declare a fully franked final dividend of 36 cents per share, down slightly from 37 cents per share a year earlier. However, this brought its full year dividend to 70 cents per share, which was flat year on year.

Wage subsidies

Premier Investments advised that it became eligible for $68.7 million of global wage subsidies across seven countries during FY 2020, of which $49 million was received as of 25 July 2020.

Of the total amount, $35.5 million was passed directly through to eligible employees unable to work.

Circling back to its dividend, the Premier Investments board revealed that it considered the impact of wage subsidies on its profit and cash position. However, it determined that the net global government subsidies received were not required for the payment of the final dividend.

Smiggle closures

Management notes that the impact of COVID-19 was particularly severe on the Smiggle business.

In light of this and to ensure Smiggle is best placed to rebound and grow post-COVID-19, management is making some big changes.

It intends to close the final four Smiggle stores in Hong Kong by the end of October. Up to 55 Smiggle stores out of 131 in the UK will be closed this financial year. Management intends to impair 100% of its UK assets, as well as those in Hong Kong, Singapore, Malaysia, and Ireland.

It will now focus on investing in Smiggle's highly profitable global online presence.

Outlook

Due to the uncertain economic environment, no guidance was given for the year ahead.

However, management believes the company is extremely well placed. This is thanks to its seven strong brands, fully integrated and highly profitable online channel, strong balance sheet, and high calibre board and management team.

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.

More on Share Market News

Stock market chart in green with a rising arrow symbolising a rising share price.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a massive day for the ASX 200, with a new all-time high recorded.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Technology Shares

This ASX tech stock rocketed 60% in March! Can it keep on delivering?

After soaring in March, the ASX tech stock is now up 169% since this time last year.

Read more »

Broker Notes

Brokers name 3 ASX shares to buy now

Here's why brokers are feeling bullish about these three shares this week.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Burgundy Diamond Mines, Clarity Pharmaceuticals, EML, and Zip are sinking today

These ASX shares are ending the week in the red. But why?

Read more »

A young women pumps her fists in excitement after seeing some good news on her laptop.
Share Gainers

Why Mesoblast, Newmont, Pilbara Minerals, and Platinum shares are jumping

These ASX shares are ending the week strongly. But why?

Read more »

a young boy dressed up in a business suit and tie has a cute grin and holds two fingers up.
Opinions

2 of my top ASX 200 shares to consider buying before April

I would happily exchange dollars for these two shares right now.

Read more »

Father in the ocean with his daughters, symbolising passive income.
Dividend Investing

I'd spend $8k on these ASX 200 shares today to target a $6,102 annual passive income

I believe these ASX 200 shares will continue rewarding passive income investors for years to come.

Read more »

Three businesspeople leap high with the CBD in the background.
Share Market News

Boom! ASX 200 blasts to new record highs

ASX 200 investors just sent the benchmark index into uncharted territory.

Read more »