Spending at Smiggle, Portman stores up, despite other retailers suffering from Omicron
Billionaire Solomon Lew’s fashion empire Premier Investments has lifted profits from its stable of fashion brands despite the retail chaos caused by the Omicron outbreak.
Billionaire Solomon Lew’s fashion empire Premier Investments has lifted profits from its stable of fashion brands despite the retail chaos caused by the Omicron outbreak and leveraged its dominant position in the retail sector to demand better rents from landlords.
Mr Lew, a long time critic of shopping centre landlords and who has turned his withering attacks on them as something of a sport, has also followed through on his threats to close stores if rents were not brought in line with the new realities of retail and has announced it had walked away from four stores in Sydney’s CBD.
Meanwhile, the divide has opened up between retailers who are maintaining profitability through the pandemic and the chaos caused by the Omicron strain and those that are suffering thinning earnings, with Mr Lew’s Premier Investments showcasing its strength through the current turmoil.
In the lead up to reporting season Premier Investments, whose retail brands include Portmans, Peter Alexander, Just Jeans and stationery chain Smiggle, revealed an upbeat trading update to the market helped by the company’s Smiggle brand boosted by back to school spending while Portmans and Peter Alexander are also thriving.
On Thursday Premier Investments reported an update for the 26 weeks to January 29 and at a time when other retailers such as candle seller Dusk, home furnishings chain Adairs and footwear group Accent have warned of a slump in earnings and sales, Premier Investments managed to maintain its profit growth momentum through Christmas and the new year sales.
The company said its Premier Retail arm – which operates its fashion stores – expected to record sales of $769m for the 26 weeks to January 29, up 0.5 per cent.
Premier Investments said it now expects Premier Retail first half underlying earnings in the range of $209.5m to $211.5m, a gain of 4.2 per cent to 5.3 per cent. This was despite its stores were closed for over 42,000 trading days during the half due to government mandates imposed in response to the Covid-19 pandemic
The performance was boosted by a rebound in Smiggle’s global business as children returned to school, buying up pencil cases, bags and folders, and as restrictions eased.
Smiggle could be entering boom time conditions with Australian parents expected to spend $2bn on back to school shopping for their kids, according to new research from the Commonwealth Bank on Thursday.
At Premier Retail’s other businesses, there were also better results from sleepwear retailer Peter Alexander and Portmans with cost controls helping to firm up Premier Investments’ bottom line.
Premier Retail chief executive Richard Murray – who last year jumped ship from running JB Hi-Fi to look after Mr Lew’s publicly listed fashion empire – said Premier Retail had delivered another strong result despite the volatile trading environment.
“The group has weathered the numerous logistical challenges during the half through meticulous planning and by taking full advantage of Premier’s owned Australian Distribution Centre. Reviews of the group’s distribution centre capabilities in both Australia and New Zealand continue as part of a long-term strategy to meet ongoing demand as customers change their shopping behaviour in the wake of Covid-19.”
The company said due to the continued momentum in consumers’ preference to shopping online, Premier Retail had kept its focus on maintaining each individual store’s profitability including demanding more realistic, that is lower, rents from landlords.
“Pleasingly, over the course of the Covid-19 pandemic the majority of landlords – large and small – have recognised the change in consumer shopping behaviours, the material ongoing impact of the Covid-19 pandemic on the retail market and, equally, the sustained value and strength of Premier’s seven iconic brands.”
It said as a result, over the past two years Premier Investments has been able to reach mutual agreements with many landlords which address the trading impact of the Covid-19 pandemic, and which appropriately rebase rents for the future.
However, some landlords had refused to budge and Premier Investments said in its trading update that Premier Retail will exit four stores in Mid-City Arcade in the Sydney CBD (Peter Alexander, Smiggle and Portmans in March 2022 and Just Jeans by no later than July 2023).
Mr Lew has consistently savaged landlords for high rents even before the emergence of the Covid-19 pandemic in 2019 but has recently heightened the rhetoric and his withering attacks on landlords as the pandemic gripped retailers, demanding lower rents that reflected lengthy store closures and consumers shopping online.
In September, Mr Lew lashed out at shopping centre landlords by warning consumers would avoid their centres unless there are vaccine and temperature checks at mall entrances with the billionaire admitting he wouldn’t feel safe sitting in a food court without Covid checks at the door.
At the time Mr Lew said shopping centre owners had an “absolute responsibility” to ensure the safety of shoppers and store staff.
Shares in Premier Investments reacted positively to the trading update, gaining 55 cents to $27.10.
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