Lew’s Premier profit dips

Full-year result slumps 20pc on impairments

THE Solomon Lew-backed Premier Investments has seen its full-year net profit slump more than 20 per cent to $83.64 million, after the company declared $30 million impairments on its casual wear group, including Just Jeans, Dotti and Jay Jays.

Premier did report record overall revenue growth of 7.98 per cent to $1.19 billion for the year to July 29, helped by strong performances by stationery chain Smiggle and sleepwear chain Peter Alexander, which are central to an ambitious 2020 global expansion plan announced by chairman Lew (left, with CEO Mark McInnes).

Shares in the company dropped by 2.31 per cent, or 45 cents, to $19 at close.

Net profit took a $30 million hit in FY18 after the company was forced to book impairments to its casual wear group amid an “increasingly competitive retail landscape”.

Sales for Jay Jays, Dotti and Just Jeans were all down for the year, despite improved final-quarter results, however Portmans and Jacqui E revenue was up 11 and 5 per cent respectively.

Premier Retail chief executive Mark McInnes said the company would continue to close unprofitable stores – having shut 103 over the past six years and 17 last year alone – if landlords did not adjust rent expectations.

“Unless landlords change the way they view their own performance … and adjust their rent levels, then we will continue to close stores,” Mr McInnes said.

“So at a headline level it might look like our sales are going down but our brands are very profitable.”

Smiggle provided the backbone of Premier’s FY revenue growth with global sales up 22.7 per cent to $293 million, with 52 new stores opening globally in FY18, bringing the worldwide network to 396.

Meanwhile, Peter Alexander delivered a 14.5 per cent increase in sales through strong like-for-like growth and the opening of 21 new stores – including airport locations in Sydney and Melbourne. Mr Lew said the company was pushing for Smiggle to hit $450 million in global sales over the next two years, and Peter Alexander $250 million.

Mr Lew said a 65 per cent jump in online revenue to $112.5 million had also surpassed expectations.

Meanwhile, the company’s underlying earnings rose 10.3 per cent on FY17 to $150.1 million, the seventh consecutive year of underlying earnings growth, while the company lifted its final dividend by 6¢ to 33¢ a share, fully franked.