Solomon Lew’s retail arm Premier Investments has gone against the trend of weak updates from Australian retailers with a solid early report on its performance in the first half of 2021-22 (January 31).
In something of a surprise Premier revealed that both its sales and earnings had grown in the about to end first half of the new financial year despite the dislocations of Covid and its various forms, lockdowns and confined consumers.
Premier said that while its stores were collectively closed for 42,000 trading days due to pandemic related lockdowns, a strong performance from its online business helped offset the slide in sales through bricks and mortar outlets.
Premier shares rose 2% to $27.10.
Online continued to be the bright spot for Premier, growing 27% for the half and making up a quarter of Premier’s total sales for the period of $769 million (up half a per cent on the first half of 2020-21.
Sales at Jay Jays, Smiggle and Peter Alexander did well to show a small amount of positive growth given the impact of the lockdowns in the period August – November and then the advent of omicron in late December and January.
Premier said its EBIT (earnings before interest and tax – a key retail profit measure) grew by between 4.2% and 5.3% to a range expected to be between $209.5 million and $211.5 million range.
Statutory earnings though will be down to around $194 million for the half thanks to significant items of $15.5 million in deferred rents and UK business rates
New CEO Richard Murray (he used to helm JB HiFi) said the business had also been forced to close four stores in Mid-City Arcade in Sydney’s CBD due to not being able to come to an agreement with landlords over appropriate rents.
“These closures demonstrate the Group’s previously announced intention to walk away from stores where landlords seek rents which are unrealistic and which do not reflect the market, particularly in those centres where customer foot traffic has been decimated by the pandemic,” he said.
Mr Murray said overall the company had delivered a strong result despite the challenges faced over the half.
“1H22 remained challenging as businesses and consumers navigated their way through prolonged government mandated lockdowns. The Group has weathered the numerous logistical challenges during the half through meticulous planning and by taking full advantage of Premier’s owned Australian Distribution Centre,” he said.
“Reviews of the Group’s distribution centre capabilities in both Australia and New Zealand continue as part of a long-term strategy to meet ongoing demand as customers change their shopping behaviour in the wake of COVID-19.”
Premier expects to release its first interim results in late March.