Solomon Lew defies gloom with retail plays

Solomon Lew keeps defying the doom and gloom that seems to permeate much of the retail ­sector.

Retail investor and Premier Investments chairman Soloman Lew Picture: Aaron Francis

Solomon Lew keeps defying the doom and gloom that seems to permeate much of the retail ­sector.

Lew, who last week railed against landlords who he says are “killing companies” by squeezing local retail tenants in favour of international fashion chains, has had a good year with his retail stocks.

Even one of his more maligned investments, Myer Holdings, has outperformed the market this year. Shares in the struggling department store group are up 24 per cent since January 1, compared with the ASX All Ordinaries Index increasing 22 per cent in the same time.

Not that Lew, who once described Myer as “an absolute disgrace” and said that, in his opinion, something needed to be done to “save Myer from the dustbins of history”, would be crowing just yet.

His Premier Investments spent about $100m in late May 2017 buying almost 11 per cent of Myer’s stock at an average of almost $1.15 a share.

With Myer trading at about 52c on Tuesday, Lew’s investment is down a good $50m in just over two years.

It is also down about 30 per cent from a 12-month high of 73c in April and, while Lew railed against Myer directors before its October annual general meeting, the embattled retailer was able to stave off a shareholder revolt regarding its remuneration revolt.

Lew has had a much better time of it with Premier Investments itself. Shares in his retailer, which owns brands including children’s stationery and accessories chain Smiggle, Peter Alexander, Dotti and Just Jeans, have increased by 33 per cent since the beginning of the year. So well is the company performing that Lew’s stake has ticked well over the $1bn mark, meaning he is currently sitting on a paper profit of about $300m for the year. Lew has also received about $40m in dividends from his Premier stock.

Premier shares have surged about 25 per cent alone since mid-September, when the company announced its full-year earnings. It delivered a net profit increase of 27.7 per cent to $106.87m, despite issues associated with Brexit that had Premier reviewing its depreciation methods for its UK stores’ plant and equipment that will trigger $25m in impairment charges.

Lew has high hopes for Smiggle in the UK, where the last ­financial accounts lodged with Companies House in London for the 2018 financial year showed it achieved sales of £69m, up from £55m for the previous 12 months, though its earnings before interest and tax fell from £10m to £7m.

Smiggle is now selling in 14 countries, including Ireland, Singapore and Malaysia, and has an “accelerated global growth strategy” across four major ideas, including new store openings, concessional partnerships with well-known global retailers and growth in online sales.

Lew has said Smiggle is on track to deliver $450m in annual global retail sales in the 2021 or 2022 calendar years.

But perhaps one of Premier’s best investments is the stake in holds in Breville, a manufacturer of kitchen and household appliances that has also been a stellar performer this year.

Breville shares are up 59 per cent since January 1, and the company is expanding more into ­Europe, where it has plans to sell products in Spain and France this year, and North America. More than two thirds of Breville’s revenue is now generated offshore, with growth particularly impressive in Europe, where it enjoyed a full year of sales in Germany for the first time to help its total revenue reach almost $760m.

Lew, whose wealth was recorded at $2.03bn in this year’s edition of The List — Australia’s Richest 250, also owns hotels and commercial property in the US, and spends at least some of the year in Los Angeles.

He also has shares in ASX-listed surf and skatewear company Globe International, which has lost about 42 per cent of its value since January 1.

Lew is the fourth-largest shareholder in the group, which sold off skate brand Dwindle earlier this year after owning it for about 17 years.