Premier Investments Limited (ASX: PMV) shares are on the slide on Wednesday morning.
In early trade, the ASX 200 retail stock is down over 7% to $31.19
This follows the release of the retailer's full year results.
ASX 200 retail stock sink on results
- Revenue down 2.7% year on year to $1.62 billion
- Premier Retail EBIT down to $325.9 million
- Net profit after tax down 4.9% to $257.9 million
- Final dividend up 16.7% to a record of 70 cents per share
What happened in FY 2024?
For the 12 months ended 31 July, Premier Investments reported a 2.7% decline in revenue to $1.62 billion. This reflects record Peter Alexander sales, which was offset by weaker Smiggle and Apparel Brand sales.
Peter Alexander delivered record sales of $508.6 million, up 6.2% on FY 2023. This is the first year that the sleepwear brand has surpassed half a billion dollars in sales. The record result was driven across all its product categories: Womens, Mens, Children, Plus-Size and Gifting.
This side of the business will soon be boosted by its expansion into the UK. The first three UK stores and dedicated UK website are scheduled to open by November 2024. The three stores are all in prime London shopping centres (Westfield London, Westfield Stratford and Kent Bluewater). It has also identified up to ten new UK store opportunities in the short term as part of the initial launch plans.
Smiggle's global sales came in 7.4% lower at $296 million. Management advised that this reflects a challenging global discretionary retail environment, with the Smiggle customer particularly exposed to increased cost of living pressures in all global markets.
The ASX 200 retail stock's five Apparel Brands, which comprise Just Jeans, Jay Jays, Portmans, Dotti and Jacqui-E, delivered sales of $790.7 million. This is a decrease of 6.4% on a record FY 2023. A new customer loyalty program across all five Apparel Brands will be launch in October. The existing loyalty program is only available to Just Jeans customers in Australia was launched in 2006, and currently has 1.8 million members.
Despite the profit decline, the company's board elected to increase its final dividend by 16.7% to a record of 70 cents per share. This brought its full year dividend to 133 cents per share, which is up 2.3% year on year.
How does this compare to expectations?
Analysts at Goldman Sachs were forecasting revenue of $1,643 million, EBIT of $339 million, and net profit after tax of $272 million.
As you can see above, the ASX 200 retail stock has fallen short of all three metrics. This goes some way to explaining why the Premier Investments share price is tumbling today.
In addition, it has confirmed that its Smiggle demerger plan is currently on ice. Instead, it plans to focus on the proposed merger of its Apparel Brands with Myer Holdings Ltd (ASX: MYR).
Management commentary
Premier Retail's interim CEO, John Bryce, was pleased with the 12 months. He said:
As our customers in all markets continue to be impacted by increased cost of living pressures, Premier Retail's strategy remains anchored on delivering value for customers in our products and shopping experience. We are particularly pleased with the result of Peter Alexander, surpassing half a billion dollars in annual sales in FY24, cementing the brand as a leading lifestyle and gifting brand in Australia and New Zealand.
In this challenging retail environment, our FY24 EBIT result of $325.9 million reflects our team's ongoing focus on inventory productivity and operational efficiencies. Our gross margins continued to strengthen through the second half of FY24, up 94 bps on 2H23, and we open FY25 with a clean inventory position, down $13.3 million or 5.8% on July 2023. Looking ahead, each of Peter Alexander, Smiggle and the Apparel Brands are focused on their future growth paths with investment in exciting new initiatives set to further strengthen our much-loved brands.
No guidance or trading update was provided.
