Premier Investments’ Smiggle chain to expand in Europe

Solomon Lew’s Premier says star retail asset Smiggle will expand in Europe, as some other brands struggle.

Smiggle has emerged as a key brand for Premier. Pic: Tara Croser.

Solomon Lew’s retail empire Premier Investments has reaped stronger sales and earnings despite challenging trading conditions that have crimped consumer demand and shaken business confidence, with his twin power brands of Smiggle and Peter Alexander driving growth.

At the same time, Mr Lew has taken a swipe at Myer, in which Premier has an 11 per cent stake, over some of its “Salvation Army” stock.

While Smiggle and Peter Alexander are doing well, Premier Investments’ troubled Portmans retail stores have returned to poor performances following a recent renewal and signs of improvement, with its sales for 2017 slumping 8.6 per cent to make it the worst performing brand in Mr Lew’s fashion group.

Jacqui E was also on the ropes through fiscal 2017, with its sales almost as bad as Portmans, falling 6.2 per cent for the year.

The stationery chain Smiggle has now emerged as a key brand that will underwrite the group’s forward earnings, with Premier Investments announcing today that following its highly successful push into Asia and the UK, Smiggle will now expand into continental Europe in 2018, with stores in the Netherlands and Belgium.

Premier Investments (PMV), which also owns fashion brands such as Just Jeans and Dotti, has revealed plans for Smiggle to achieve revenue in excess of $400 million by 2020, and for pyjamas and sleepwear retailer Peter Alexander to hit sales of $250 million by 2020.

Both brands recorded double-digit sales growth in 2017, helping to counter flat to slightly negative sales for its other retail brands.

Premier Investments today posted revenue of $1.101 billion, up 3.98 per cent, with profit for fiscal 2017 rising 1.21 per cent to $105.136 million.

Total online sales were $68.1 million, up 44.3 per cent, and the online business has grown from 1.1 per cent of sales in 2011 to 7.1 per cent in 2017.

Buttressing the result was the $170.6 million of cash on hand the company held, as well as its stake in appliances company Breville, which was valued at $383.8 million.

However, Premier Investments’ decision to grab a nearly 11 per cent stake in retailer Myer weighed down the balance sheer as shares in Myer plummeted over the last few months.

And in a swipe aimed directly at Myer management and chief executive Richard Umbers, Mr Lew today condemned the department store’s new strategy to have clearance stores dispose of unwanted stock.

Mr Lew told analysts some of the stock being sold was so old “it belongs in the Salvation Army’’. The clearance stores are an initiative of Mr Umbers.

Premier’s profit was also hurt by $3 million in legal costs linked to its failed attempt to stop a former chief financial officer of the group jump ship to rival fashion outfit Cotton On. There was one less trading week in the period, which also shaved down sales.

Premier Retail boss Mark McInnes said the group was “relentlessly focussed on implementing” its strategies, investing in expanding Smiggle globally, growing Peter Alexander significantly and delivering a “world class online experience for our customers while achieving ongoing cost efficiencies and continuing to invest in our core apparel businesses.”

Premier, which is majority-controlled by Mr Lew, declared a final dividend of 27 cents per share, up from 25 cents in 2016, and payable on November 17.

Premier Retail, the retail investment arm of the Premier Investments group, posted underlying EBIT of $136 million, up 7.3 per cent. The cost of doing business fell by 101 basis points as Premier Retail sharpened its sourcing, efficiencies and supply chain management.

Total sales for the group were up 5.7 per cent to $1.1 billion, while like-for-like sales across its fashion portfolio of retail brands was up 1.1 per cent.

Premier chairman Solomon Lew and CEO Mark McInnes. Pic: David Geraghty

Smiggle is now emerging as the key driver of growth for Premier Investments as Mr Lew takes the stationery chain model to the world, following recent entries into Asian markets such as Singapore, Hong Kong and Malaysia as well as European advances into the UK and Ireland.

At a time when retailers across the world are suffering from intense competition and souring consumer confidence, Smiggle’s sales for 2017 of $238.9 million were up 28.8 per cent on fiscal 2016 through the opening of 58 new stores and solid like-for-like sales in all countries.

Smiggle will now enter continental Europe by next year and is targeted to hit sales of $400 million in three years.

Total sales for Peter Alexander rose 14 per cent to $190.9 million.

However, while Smiggle and Peter Alexander outperformed, other parts of the Premier Investments fashion empire were struggling against a downturn in consumer confidence, adverse weather conditions that hurt sales and intense competition in the fashion sector.

Just Jeans posted a flat 1.5 per cent increase in sales to $216.4 million, Jay Jays saw sales fall 1.6 per cent to $158.9 million, Dotti recorded a 3.6 per cent fall in sales to $110.4 million while Jacqui E sales slid 6.2 per cent to $65.7 million.

Portmans, which had been showing signs of improvement recently following a restructure, saw sales slide 8.6 per cent to $111.5 million.