Premier Investments is accelerating its emphasis on the Smiggle brand as it expands an online and wholesale business globally, although sales growth for established Smiggle markets eased back in the first half.
Despite a tough domestic retail environment, Premier Investments ((PMV)) continues to maximise trading outcomes for its portfolio of brands. The driver of growth in the company’s retail footprint is Europe, where Smiggle stores will be launched in the Netherlands in the second quarter of FY19.
As sales of some of its main Australian brands slowed in the closing months of 2016-17, Premier Investments was saved by another solid performance from what are emerging as its two growth engines – the Smiggle and Peter Alexander chains.
The company's global expansion plans reflect increasing confidence in the medium/long-term outlook, Macquarie suggests. The broker believes the company is investing ahead of the curve, which is temporarily weighing on margins and growth.
FY18 results highlight the growing contribution of Smiggle as well as good cost control, and Deutsche Bank is encouraged by the sales trend in the apparel brands. Smiggle and Peter Alexander, the highest margin and highest growth brands, now account for 43% of retail sales.
UBS retains a positive view on the stock following the 10.77% investment in Myer ((MYR)).The company has stated it does not currently intend to make a takeover offer and, should its intentions change, the broker envisages synergies of well over $25m in the form of revenues and gross profit.