AUS
NZ
UK
CA
USA
IND
If you’re seeking a combination of market-beating returns and attractive dividend yields, look no further than Premier Investments Limited (ASX:PMV). Analysts at Bell Potter have expressed strong optimism about this retail giant, especially following its recent financial results.
Premier Investments, which owns well-known brands like Peter Alexander and Smiggle, recently released its full-year results, prompting a mixed reaction from analysts. While the results contained some positive highlights, certain areas fell short of expectations. According to Bell Potter, the update indicated a slight revenue miss for the Smiggle brand, which recorded approximately a 7% shortfall compared to forecasts. In contrast, Peter Alexander emerged as a standout performer, posting a solid increase in sales.
The first seven weeks of the first half of 2025 have shown a softer start than anticipated, with global sales down 3.5% compared to the previous corresponding period. Notably, the Smiggle division is experiencing a significant decline, tracking at around 15% below last year's performance. Despite these challenges, Premier Investments’ core brand, Peter Alexander, managed to grow by 5%. The company has also announced its intent to divest its non-core Apparel Brands to Myer Holdings Ltd (ASX:MYR) through an all-script sale, which has led to a delay in the Smiggle demerger planned for January 2025.
In light of these results, Bell Potter has adjusted its earnings estimates for Premier Investments. However, the broker remains positive, highlighting that the merger with Myer could unlock considerable value for shareholders in the near future. Bell Potter stated, “With the AB/MYR merger targeted for completion soon, we anticipate updates over the coming months during the December AGM or at MYR’s Strategy Day. The overall demerger plans present several catalysts, and we view the AB/MYR merger favorably as it allows PMV to retain its higher-margin Smiggle and Peter Alexander earnings while the lower-margin Apparel Brands benefit from Myer’s synergies.”
Based on these insights, Bell Potter has maintained its buy rating for Premier Investments, though it has slightly reduced its price target from AU$37.00 to AU$34.00. Given the current share price of AU$30.67, this adjustment indicates a potential upside of approximately 11% for investors over the next year.
Moreover, Bell Potter is forecasting fully franked dividends of 111.7 cents for FY 2025, followed by an increase to 123.2 cents in FY 2026. This translates to attractive dividend yields of 3.6% and 4%, respectively, making Premier Investments not only a compelling growth opportunity but also a reliable income source for investors.
