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Shares of Premier Investments Limited (ASX:PMV) are experiencing a notable decline, dropping over 7% to AU$31.19 during early trading on Wednesday. This downturn follows the release of the retailer’s full-year financial results, which revealed challenges amidst a mixed performance across its brand portfolio.
In the fiscal year ending July 31, Premier Investments reported a 2.7% decrease in revenue, totaling AU$1.62 billion. The company’s earnings before interest and taxes (EBIT) fell to AU$325.9 million, while net profit after tax decreased by 4.9% to AU$257.9 million. Despite these setbacks, the board announced a 16.7% increase in the final dividend, setting it at a record 70 cents per share. This brings the full-year dividend to 133 cents per share, representing a 2.3% increase year on year.
Examining the performance of individual brands, the results reflect a contrasting picture. The sleepwear brand Peter Alexander achieved record sales of AU$508.6 million, marking a 6.2% increase from the previous year. This is the first time the brand has surpassed the half-billion-dollar mark, driven by strong sales across all product categories, including women's, men's, children's, plus-size, and gifting. The brand's future expansion into the UK, with three stores and a dedicated website set to launch by November 2024, is expected to further bolster growth.
In contrast, the Smiggle brand faced significant challenges, reporting global sales that were down 7.4% to AU$296 million. Management attributed this decline to a tough global discretionary retail environment, particularly impacting Smiggle customers who are grappling with rising living costs. The Apparel Brands segment, which includes Just Jeans, Jay Jays, Portmans, Dotti, and Jacqui-E, also suffered a 6.4% decline in sales, totaling AU$790.7 million.
The disappointing overall results fell short of analysts’ expectations, with Goldman Sachs predicting revenue of AU$1.643 billion, EBIT of AU$339 million, and a net profit after tax of AU$272 million. The underperformance in key metrics has contributed to the significant drop in Premier Investments’ share price.
Additionally, the company has put its Smiggle demerger plans on hold, choosing instead to focus on a proposed merger of its Apparel Brands with Myer Holdings Ltd (ASX:MYR). This strategic pivot reflects the company’s intent to streamline its operations amid a challenging retail landscape.
Interim CEO John Bryce expressed cautious optimism about the past year, highlighting the record sales of Peter Alexander and the company's commitment to providing value in a tough retail environment. He emphasized the ongoing focus on improving inventory productivity and operational efficiencies, noting that the gross margins have strengthened in the latter half of FY24.
Despite these efforts, the lack of guidance or a trading update leaves investors in a state of uncertainty about the future direction of Premier Investments.
