Premier Investments: ticking all the boxes

Flat sales growth for the first half of FY22 was enough to prop up Premier Investments (ASX: PMV) shares, up 4.6% at noon.

Premier managed to eke out some top-line growth with sales of $769m, up 0.5% from last year.

This was despite the Group's stores closed for over 42,000 trading days in the first half. By comparison, the entirely of FY21 lost 50,581 days.

Premier expects first half earnings to be between $209.5m to $211.5m, a 4.2% to 5.3% gain from the previous period.

Premier expects to release its first half results in late March 2022.

Making the best of a bad situation 

Premier’s resilient sales was supported by a 27% increase in online sales. Online sales now represents 25% of total global sales, up from 20% in 2021 and 13% in 2020. 

From a brands perspective, Peter Alexander was said to have delivered "outstanding results". The sleepwear business has grown to represent 27% of Group sales in FY21.

Premier is also positioning for a comeback for Smiggle as children return to school and covid restrictions ease. Smiggle contributed 9.8% of Group sales in FY21.

Margins, show me margins 

Supply chain issues has been a recurring narrative among ASX retail stocks, notably names like Adairs (ASX: ADH) and Kogan (ASX: KGN).

Encouragingly, Premier CEO Richard Murray said that they have "weathered the numerous logistical challenges during the half through meticulous planning and by taking full advantage of Premier’s owned Australian Distribution Centre."

While no specific margin percentage was mentioned in today's update, the company's earnings as a percentage of sales was between 27.2% - 27.5% (divide earnings by revenue).

By comparison:

• FY21: 24.4%

• 1H21: 30.3%

• FY20: 15.4%

Morning fade

Premier shares rallied 7.5% as the market opened, but sellers have clearly taken control, as the stock is up just 1.75% at 1:00 pm AEDT.

Premier Investments intraday (3 minute) chart, TradingView

The broader market is currently in a vulnerable state, with plenty of investors selling into strength.

While Premier delivered a sound performance in the first half, investors might have to brace for more volatility ahead.