Solomon Lew’s Premier Investments flags ‘significant hardship’ as coronavirus hits
Solomon Lew’s Premier Investments will delay its dividend and warned of shutting stores as the coronavirus slams retailing.
Billionaire Solomon Lew’s Premier Investments will delay paying its dividend and is prepared to close stores as the coronavirus pandemic hits global retail.
It came as Premier posted an interim net profit of $99.6 million, a gain of 12.15 per cent, as sales at its portfolio of fashion stores boomed.
But it has warned landlords it is prepared to close shops across its global store network unless they respond to the coronavirus pandemic and offer relief to tenants.
The retailer will delay paying its dividend to preserve cash, amid uncertain times.
Premier warned it was bracing for possible “significant hardship” across its business as the coronavirus pandemic sends shockwaves through the economy.
Mr Lew, whose Premier group own chains including Just Jeans, Portmans, Peter Alexander, Dotti and Smiggle, said it had previously diversified its supply chain away from China, the source of the pandemic.
But its Chinese factory suppliers had reopened and it had secured the majority of its fashion products for the second half, albeit at slightly higher supply chain costs.
Premier said revenue for the first half rose 7.53 per cent to $733.87m and declared an interim dividend of 34 cents per share, up from 33 cents. However it won’t be paid until the end of September.
As the coronavirus pandemic smashes retailers, Premier Investments said landlords must help out. Premier had already shut down some stores and more would close if landlords failed to act.
“Landlords have a major role to play to ensure retailers can operate in the short term for the long term benefit of all stakeholders.
“Since the outbreak of COVID-19 we have closed two stores in Hong Kong, and we are prepared to close many more stores globally if landlords do not respond to the current crisis.
“In Australia and New Zealand close to 70 per cent of stores are already in holdover or with leases expiring in 2020, providing the group with maximum flexibility.”
Premier’s Smiggle stationery chain has more than 100 stores across Asia and Europe and is a core growth strategy for Premier.
At this stage Smiggle’s Hong Kong, Singapore and Malaysia trade has been severely disrupted. Smiggle’s Ireland and United Kingdom trade has deteriorated significantly since the European VOVID-19 outbreak and the announcement of a global pandemic.
Premier said in Australia and New Zealand the pandemic had hit trade in stores historically supported by international students.
“There could be an impact on gross margin as we clear inventory in each market to respond to consumption patterns,” it said.
“We have detailed cost and supply chain mitigation strategies underway which will be deployed depending on the way in which the challenges we face evolve.
“There could be significant hardship right across our business. We have been transparent in describing the ever evolving impacts on our group.
“At this stage it is not currently possible to estimate the extent of these impacts on the group’s current and future earnings.”
Despite the uncertainty surrounding COVID-19, Premier Investments said it has a strong balance sheet, with net cash of $98.2 million, including cash on hand of $199.8m.
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