Smiggle, Peter Alexander slated to become standalone companies in 2025

Stationery brand Smiggle and sleepwear business Peter Alexander will be spun off from Premier Investments’ portfolio of brands next year to become standalone ASX-listed retailers with ambitious international expansion plans.

Premier Investments, which also operates clothing brands Just Jeans, Jay Jays, Dotti and more, announced in August last year that it was restructuring the business after the surprise exit of then-CEO Richard Murray and launched a strategic review into the potential spin-off of Smiggle and Peter Alexander.

Premier Investments intends to spin off Smiggle in January next year.Credit: Louie Douvis

“A number of people in the market are predicting the parts are worth more than the whole, and if that’s the case, we have to act in the best interest of shareholders,” Premier chairman and billionaire retail veteran Solomon Lew said on Tuesday.

The spin-offs would mean each business would have a board of directors and management team singularly focused on the standalone brand, he added.

Premier chairman Solomon Lew with chief executive John Bryce.Credit: Eamon Gallagher

“In the event that the business does get spun out, it will have a separate board, it will operate independently, and in some instances, will be able to move a lot faster,” Lew said. “There’s a lot of effort going into international growth.”

Smiggle is set to be demerged by the end of January next year, while a similar spin-off for Peter Alexander is being explored for some time in calendar 2025. Premier’s board of directors is working through regulatory approval processes to execute the proposed spin-off.

The stationery brand’s sales dipped 3.6 per cent to $183.9 million in the first half of the 2024 fiscal year as families juggled cost of living pressures. However, Premier is aiming to build out the brand’s global presence through store expansion, including a new wholesale partnership that has already resulted in seven Smiggle stores opening across the United Arab Emirates and Qatar.

More than 10 new stores will be rolled out by the end of June.

Meanwhile, Peter Alexander’s sales shot up 6.7 per cent to $279.3 million in the first half of the 2024 financial year. The sleepwear brand has announced plans to launch into the United Kingdom later this year, with 10 store site opportunities identified and a dedicated UK website in the works. Two stores will be opened in time for this year’s Christmas period.

“With a population in the United Kingdom of more than double the combined population of the existing Australia and New Zealand markets, a significant opportunity is ahead for the brand entering this exciting new chapter of international growth,” stated a presentation to investors.

Regarding Peter Alexander’s potential spin-off, Lew said: “It’s all about the day-to-day shareholders and creating the opportunity and the profitability, there [are] milestones and timetables, but we’re working through all those.”

Overall, Premier’s half-year statutory net profits inched up 1.7 per cent to $177.2 million, while earnings before interest and tax slid 4.8 per cent to $209.8 million. Business costs declined 0.9 per cent as efficiencies offset inflation pressures. The company has declared an interim dividend of 63 cents per share, 16.7 per cent higher than last year’s interim dividend.

Premier’s suite of apparel brands Just Jeans, Jay Jays, Dotti, Portmans and Jacqui E saw a collective 8.1 per cent drop-off in sales to $416.3 million for the half.

Lew said the retailer was looking to “create opportunities” for its apparel brands by “refreshing their format”, revamping store design and adding a loyalty program by the end of the calendar year.

He did not rule out a future spin-off of those brands. “At this point in time, everything’s possible.”

Premier’s share price closed 4.4 per cent higher on the news in afternoon trading.

Market analysts broadly expect estimates for Premier’s earnings to be revised higher.

“Peter Alexander continues to be a standout within the group with continued sales growth, but elsewhere the sales trends are soft,” MST Marquee senior research analyst Craig Woolford in a note.

“Premier has delivered a good earnings result with caution around sales momentum.”

Lew is keeping an eye out for potential acquisition opportunities in the future, but said he was not currently considering any brands in particular.

Premier Investments is a major shareholder of department store Myer and holds a 28.4 per cent stake valued around $155 million as well as a 25.5 per cent stake in appliance maker Breville worth $970.5 million.

He described the appointment of former Qantas loyalty boss Olivia Wirth to executive chair/CEO of Myer as “outstanding” and spoke highly of her business and management experience at the airline.

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