Solomon Lew’s Premier Investments soothes frayed retail nerves

Premier Investments has seen its valuation leap $240m after it touted the likelihood of robust first-half sales.

Premier Investments Chairman Solomon Lew and chief executive Mark McInnes.

Solomon Lew’s Premier Investments has seen its valuation soar $240 million after it allayed concerns around its performance in the wake of a troubled run for retailers.

The company’s shares had slumped over 11 per cent over the last month, weighed by pessimism in the sector that has been driven by soft sales updates from Oroton and The Shaver Shop as well as the sudden collapses of David Lawrence, Marcs, Herringbone and Rhodes & Beckett.

Official data this week also revealed soft retail turnover in December, further dampening the view on the industry.

In a profit update this morning, Premier (PMV) soothed worries about its own performance, noting it was likely to deliver record sales and pre-tax earnings in the first-half.

In response, Premier shares had risen 12.1 per cent to $14.04 by 11.35am (AEDT), instantly reclaiming the trading losses of the past four weeks.

“Premier Investments notes the recent press speculation around 1H17 earnings risks for retailers in Australia including Premier,” the company said.

“In the interests of keeping the market fully informed, Premier has decided to update the market with key trading results for Premier Retail prior to releasing its half-year results.”

The group’s first half ended on January 28, with unaudited results showing a 7.1 per cent rise in sales to $588.6 million, on a comparable 26-week basis (the prior first half held 27 weeks).

Premier’s underlying earnings before interest and tax were seen in a range of $92-$93m for the six months to January 28, an increase of around 10 per cent on the corresponding period last year (on a 26-week basis).

The company will provide further details when it releases its first-half results on March 21.