Premier Retail, Solomon Lew’s fashion empire including Smiggle and Peter Alexander, is about to post a record half year result, a beacon in a troubled retail world.
A short time ago, Premier Retail shares were up 11.7% to $13.99.
The company, noting speculation around earnings risks for retailers in Australia, today released a short market update on expected half year results.
Premier Retail says total sales for the six month are expected to come in at a record of about $588.6 million, a 7.1% increase on the first half of 2016.
Underlying EBIT is expected to be between $92 million and $93 million, a 9.4% to 10.6% increase on the $84.1 million in the same 26 weeks in 2016.
Australian retail sales recorded a shock decline in December, according to official numbers released this week.
And this has been reinforced by several retailers reporting weaker than expected Christmas and New Year sales. Among them, Oroton says like-for-like sales are down 10% in the first half.
And a string of retail failures recently has put the sector in focus. Yesterday Fashion clothing brands Herringbone and Rhodes & Beckett have gone into voluntary administration, joining a growing list of retailers seeing customer support fade.
They follow fashion labels Marcs and David Lawrence which last week went into voluntary administration, citing deteriorating sales, general market conditions and poor cash flow.
Others going into administration, under pressure from online trading and emerging competitors, include Payless Shoes, Pumkin Patch, Howards Storage World and Dick Smith stores.
Gary Huxtable, client adviser at Atlantic Pacific Securities, says Premier regularly gets a dark shadow cast across it by negative sentiment towards retailers.
He says the doom and gloom narratives and Smiggle’s UK exposure post-Brexit were overdone, with the stock being oversold over the last week.
“Those familiar with the continued international expansion of Smiggle, and world-class retail portfolio management skills of Mr Lew, would have been looking upon the recent sell-off as an opportunity to buy prior to their March report,” says Huxtable.
“They’ve simply been able to cash in on the disconnect between market expectations and business performance sooner rather than later.”
In 2016, the children’s stationery chain Smiggle and sleepwear brand Peter Alexander helped push Premier to a record full year result, including a profit of $103.87 million, a 17.9% rise on the previous year.
The company is a stand out among Australian retailers, growing sales where others struggle. Sales were up 10% to $1.058 billion, passing the $1 billion mark for the first time. Like-for-like sales grew 3.5%.
Smiggle has stores in Australia, New Zealand, Singapore, England, Scotland, Wales, Malaysia and Hong Kong. The company also runs Just Jeans, Portmans, Dotti, Jay Jays and Jacquie-E.
Premier is due to announce its full half year results on March 21.