Up to the close of business on Tuesday, shares in Premier Investments (PMV), the holding company for most of Solomon Lew’s retail interests had lost around 13% for the year so far as investors fretted that it might be infected by the malaise that seems to be hammering small and medium retailers, some of whom have gone bust in recent weeks, especially in the men’s and women’s fashion wear sector.
That fall obviously rankled with the company and its board and managers because yesterday it release a surprise trading update which showed record revenue and earnings for some businesses, and up went the shares, jumping by more than 12% at one stage and almost wiping out the year’s losses.
By the close the shares had steadied to be up 11.9% at $14.
Premier was not expected to hand down its first-half results until March 21, but yesterday it released the surprise update it said to keep the market informed in light of “recent press speculation around [first half] earnings risks for retailers in Australia including Premier”.
Total sales across the company’s stores, which also include Portmans, Jay Jays, Jacqui E, Dotti and Peter Alexander, for the half are expected to be up around 7.1% to $588.6 million.
Unaudited underlying earnings before interest and tax are expected to finish $92 million to $93 million, up from $84 million in the same period of the prior year, according to Premier. That means growth of between 9.4% and 10.6%. The sales and earnings figures represent a record high for Premier, but they are still subject to review by the auditors, with further details to be released on its scheduled earnings update in March.
Interestingly, investors ignored the fact that the underlying profit estimate fell short of consensus forecasts of around $99.3 million.
Concern about the health of small and medium retailers has growth after a profit downgrade at OrotonGroup (but not a solid result at Kathmandu), a friendly takeover offer for struggling apparel retailer Specialty Fashion Group and the collapse of clothing chains Marcs, Payless Shoes, David Lawrence, Herringbone, Rhodes & Beckett and Pumpkin Patch (although that chain has been struggling now in NZ and Australia now for more than a year).
