Consumer Discretionary

Premier Investments weathers the covid storm as online sales jump

Fri 25 Mar 22, 11:10am (AEST)
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Key Points

  • Premier sales were flat but profits fell in the first-half of FY22
  • The first-half was close to losing more store trading days than the entirety of FY21
  • The second-half has opened strongly, with sales up 6.2% in the first five weeks

Premier Investments (ASX: PMV) has managed to keep margins and sales intact during a challenging first-half, impacted by government mandates and omicron.

The company's stock is down -0.3% in early-trade.

Financials at a glance

  • Revenue of $770m, down -1.93%

  • Gross margin of 65.9%, up 54 bps 

  • Net profit of $163.6m, down -13%

  • Record interim dividend of 46 cents per share, up 35.3%

Excluding significant items, Premier earnings were 5.5% higher than last year. The company incurred $15.6m in significant items, related to covid rent concessions.

The interim dividend has a record date of Wednesday, June 22 and represents a yield of around 1.6% based on today's open price of $28.80.

Weathering the storm

“1H22 was one of the most challenging and unpredictable halves of the pandemic. Under government mandates, stores in our largest markets were shut for most of the first quarter equating to 42,675 trading days during the period,” said Chairman Solomon Lew. 

To add some perspective, Premier lost 50,581 retail store trading days for the entirety of FY21.

Online sales helped pick up the slack, up 27.3% to a record $195.4m.

The online channel now contributes 25.4% of total Group sales, compared to 20.1% a year ago.

Premier brands power ahead 

“It was particularly pleasing to see the record results from Peter Alexander, Portmans and Online. Further, the Smiggle business has shown positive momentum during the half as children have returned to school and COVID-19 restrictions have eased,” CEO Richard Murray said in a statement.

Peter Alexander sales rose 11.4% to $227.4m - contributing 29.5% to overall Group sales.

Smiggle sales rose 5.6% to $146.3m or 19% of Group sales. The Smiggle business faced major disruptions in the first-half as a result of school and store closures across Australia.

Outlook 

Premier said that the second-half of 2022 has “opened strongly” with total global sales up 6.2% in the first 5 weeks. 

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Premier Investment 12-month price

 

What brokers think

At first glance, Goldman Sachs said that the first-half results were at the top end of Premier's January guidance of $209.5 to $211.5m.

The broker was concerned about the trajectory of Smiggle sales, citing the recovery was below their expectations.

Goldman observed that the "demand environment is still unusually elevated" but expects conditions to normalise over the upcoming year.

The note was Sell rated on Premier shares with a price target of $23.60.

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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