Key points
- Premier Retail had a better half than most retailers despite losing 42,000 trading days
- Strong performances from Peter Alexander and Smiggle drove modest sales growth
- Margin expansion underpinned earnings growth
The Premier Investments Limited (ASX: PMV) share price is on the move on Thursday morning.
At the time of writing, the retail conglomerate's shares are up 9% to $28.86.
Why is the Premier Investments share price jumping?
Investors have been bidding the Premier Investments share price higher today following the release of a first half trading update for its retail businesses.
According to the release, the Premier Retail business has navigated the tough operating conditions and the loss of 42,000 trading days to deliver growth during the first half.
On the top line, the company expects Premier Retail's sales to come in at $769 million for the six months ending 29 January. This represents a 0.5% increase over the prior corresponding period and was driven largely by strong online sales growth. Online sales are expected to be $195 million for the half, up 27% over the prior corresponding period.
Pleasingly, unlike what other retailers have reported, Premier Retail's margins have improved during the six months. So much so, the business expects to report earnings before interest and tax (EBIT) of $209.5 million to $211.5 million. This represents a 4.2% to 5.3% increase over the prior corresponding period.
Management advised that a key driver of this performance was a rebound in the Smiggle global business as children returned to school and COVID-19 restrictions eased. This was supported by strong performances from its Peter Alexander and Portmans businesses and disciplined cost control. The latter includes rent abatements.
Premier Retail's CEO, Richard Murray, commented: "Premier Retail has delivered another strong result despite the volatile trading environment. 1H22 remained challenging as businesses and consumers navigated their way through prolonged government mandated lockdowns."
"The Group has weathered the numerous logistical challenges during the half through meticulous planning and by taking full advantage of Premier's owned Australian Distribution Centre. Reviews of the Group's distribution centre capabilities in both Australia and New Zealand continue as part of a long-term strategy to meet ongoing demand as customers change their shopping behaviour in the wake of COVID-19," he added.
Mr Murray also revealed that the company plans to exit four stores in Mid-City Arcade in the Sydney CBD. Three of these (Peter Alexander, Smiggle and Portmans) will happen in March and one (Just Jeans) will occur no later than July 2023.
He explained: "These closures demonstrate the Group's previously announced intention to walk away from stores where landlords seek rents which are unrealistic and which do not reflect the market, particularly in those centres where customer foot traffic has been decimated by the pandemic."
Audited half year results will be released in March.
