Yesterday Soloman Lew’s Premier Investments reported an increase in pre tax profit of 9.3% to $76.7 million and an increase in revenue of 16.9% to $1.02 billion in an Australian economic environment of low inflation and relatively low growth which is a solid result.
Solomon Lew said:
The retail environment in Australia remains challenging, however we continue to adapt by rejuvenating our core brands, growing uniquely positioned brands like Peter Alexander and seeking opportunities for further offshore expansion of Smiggle.
All of this seems fair and realistic but Mr Lew and his Retail CEO Mark McInnes are in the press this morning with Mr McInnes telling The Australian that:
The economy is in the cardiac arrest ward and it needs to be kick-started…The Reserve Bank needs to lower rates again to stimulate consumer sentiment and buffer five years of poor management and legislation by the previous government.
But that’s just not true – leaving aside the politics of the previous government, consumer sentiment as measured by Westpac and the Melbourne Institute is up 13.8% since the RBA started cutting rates back in 2011 and at 110.6 is fairly strong by historical standards.
But Mr McInnes’ boss, Mr Lew, has called for a 50 basis point cut by the RBA next month or at least by Christmas.
It all seems a bit hysterical for a company that freely admits that its Jay Jay and Just Jeans brands are down and it is the Smiggle which is the big star in their stable. Perhaps Mr McInnes has hit on the real driver of the performance of retail in Australia when he says Smiggle is a “completely unique brand in the international market”.
Maybe that’s the problem with Australian retailing, perhaps its not about consumer confidence and it can’t be about rates which are at generational lows.
Maybe it just about price and brand.
Australia needs more Smigglelike uniqueness – that will drive retail.
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