Premier’s update a boost to confidence
RETAILERS surged following a better-than-expected sales update from the owner of Just Jeans, Smiggle and Peter Alexander, in a sign that the economy is on a fast track to recovery despite the Christmas COVID flare-up.
Shares in Premier Investments hit new highs from the get-go on Wednesday, surging more than 18 per cent to an intraday high of $26.70 after announcing that earnings before interest and tax for the first half of the financial year will lift by up to 85 per cent to $221m-$233m. The company closed at $25.35, up 12.7 per cent, valuing chairman Solomon Lew’s 42 per cent stake in the company near $1.69bn.
Analysts at Goldman Sachs said the result was “significantly stronger” than expected. A Blue Ocean Equities analyst called them “very impressive” and Morgan Stanley researchers lauded the result as “exceptionally strong”.
The results sparked a sense of confidence in consumer spending and the Australian economy and investors jumped on other retail stocks, most of which are yet to issue guidance.
Shares in JB-Hi Fi jumped by 2.3 per cent to close at $51.86 after hitting a record high of $53.05, while infant retailer Baby Bunting lifted 3.8 per cent per cent to $5.15 after hitting its all-time high of $5.37.
Myer, in which Premier Investments holds a 10.8 per cent stake, was up 8.5 per cent to $0.32, while Harvey Norman lifted 4.2 per cent to $5.20 and outerwear retailer Kathmandu ticked up by 3.4 per cent to $1.22.
ASX newcomer Universal Store lifted 14.4 per cent to hit a new high of $5.89 after it announced EBIT for the first half of the financial year would be in the range of $30m-$31m, representing earnings growth up to 67 per cent. It also means the retailer has seen its share price grow more than 50 per cent since it listed on the ASX in November.
Head of industry affairs at the Australian Retailers Association Fleur Brown said she was “relieved and encouraged” by the trends emerging in the industry.
“Whilst there are still deep pockets of pain, within CBD and Victorian retail in particular, discretionary retail has seen some promising signs with clothing, footwear and personal accessories up 18 per cent year on year in November,” she said.
NAB Group chief economist Alan Oster agreed that the economy is moving back into gear. “We expect the December quarter to be quite strong, and then we expect March to not be quite as strong — but over the next 12 months we are expecting growth of 4 per cent,” he said.