Premier Investments share price jumps 7% on record FY22 profits and special dividend

Premier Investments had a strong 12 months…

Key points
  • Premier Investments has released its full year results for FY 2022
  • The Smiggle owner delivered record sales, record profits, and a special dividend
  • FY 2023 has started very strongly

The Premier Investments Limited (ASX: PMV) share price is storming higher on Thursday following the release the retailer's full year results.

At the time of writing, the retailer's shares are up 7.5% to $22.25.

A young woman looks happily at her phone in one hand with a selection of retail shopping bags in her other hand.

Image source: Getty Images

Premier Investments share price higher on record profits

  • Revenue up 3.9% to $1,497.5 million
  • Online sales grew 14.3% to $340.1 million
  • Earnings before interest and tax (EBIT) up 2.8% to $969.8 million
  • Net profit after tax up 4.9% to $285.2 million
  • Fully franked final dividend of 54 cents per share
  • Special dividend of 25 cents per share

What happened in FY 2022?

For the 12 months ended 30 July, Premier reported a 5.2% increase in global sales to $1,497.5 million. This was despite the company's stores being closed for 42,675 trading days during the first half.

Premier's sales growth was driven partly by strong performances from its key Peter Alexander and Smiggle businesses. Peter Alexander sales were up 11.4% to $428.5 million and Smiggle sales rebounded with a 24.6% increase to $261.2 million.

This was supported by strong online sales growth of 14.3% to $340.1 million. Premier's online sales are now up fivefold since FY 2017 and represent almost 23% of total sales.

Thanks to EBIT margin expansion of 100 basis points to 22.4%, Premier's EBIT grew 10.1% to $335 million excluding significant and one-off items. Including these items, EBIT rose 2.8% year over year.

Another positive is that management revealed that it has put its strong earnings to use, clearing its debt and leaving it with a cash balance of $471.3 million.

In light of this strong performance, the Premier Board has elected to pay a fully franked final dividend of 54 cents per share and a fully franked special dividend of 25 cents per share. This took its full year dividend to $1.25 per share, which is up 56.3% year over year.

But the returns won't stop there. The company has also announced an on-market share buyback of up to $50 million.

Management commentary

Premier's Chairman, Mr Solomon Lew, said:

Our team has delivered an impressive full year result for our shareholders, especially in the context of significant operational challenges that included Government mandated lockdowns, global supply chain complexities and omicron disruption. Premier Retail EBIT is up 10.1% on the prior year and is more than double pre-pandemic levels. This is testament to the seamless leadership transition to Richard Murray, the unrelenting focus on execution by our management team, and the commitment of our people.

Outlook

As you might have guessed from the Premier Investments share price performance today, the company's outlook commentary was also very positive.

It advised that FY 2023 has opened strongly with total global sales for the first 7 weeks up 46.7% on the prior corresponding period. They are also up 21.5% on pre-COVID FY 2020 sales.

Management commented:

The strong start to 1H23 and clean inventory position has given the Group confidence that it is well positioned to drive sales through the critical Black Friday, Cyber Monday, Christmas, Boxing Day Sales and 'Back to School' trading periods ahead.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Premier Investments Limited. 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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