Solomon Lew’s Premier Investments set to nearly double full-year profits

Solomon Lew’s retail empire Premier Investments has continued its run of strong sales off the back of Australia’s COVID-19 recovery, forecasting a near doubling of its full-year profits.

In a trading update on Friday, the retailer said its sales from the end of January were up 70 per cent, though this is compared to last year where most of the company’s stores were shut due to the pandemic. However, sales compared to the first half of 2019, which was unaffected by COVID, still grew 15.9 per cent.

Solomon Lew and Mark McInnes have delivered yet another record result for Premier Investments.Credit:Eamon Gallagher.

The retailer, which runs brands such as Peter Alexander, Smiggle and Just Jeans, said the bumper result was thanks to strong trading over the Easter holiday period and Mother’s Day, two key events for the rag trader.

As a result of the stronger-than-expected sales performance, Premier now expects its earnings before interest and tax for the 12 months to the end of July to be in the range of $340 million to $360 million, though the company noted this was predicated on there being no more major COVID lockdowns or other incidents between now and the end of July.

This marks an 82 to 92 per cent rise on last year’s earnings of $187.2 million and a more than doubling of the retailer’s earnings in the 2019 financial year.

Premier has been one of the biggest retail beneficiaries of the pandemic, largely thanks to the company’s efficient and highly profitable online platform. It’s also been one of the biggest recipients of the government’s JobKeeper scheme, taking over $70 million through the scheme, though it paid back its ‘net benefit’ of $15.6 million in early May.

The retailer, which runs brands such as Peter Alexander, Smiggle and Just Jeans, said the bumper result was thanks to strong trading over the Easter holiday period and Mother’s Day.Credit:Edwina Pickles

Outgoing chief executive Mark McInnes said the record result was also due to Premier’s choice to hike its stock levels ahead of the Easter trading period. Many other retailers have recently reported issues with getting sufficient stock due to COVID-related shipping delays.

“The strategic decision taken last year by [Mr Lew] and I to build our supply chain and significantly invest in wanted inventory for Easter, April school holidays, Mother’s Day and the winter season has ensured we are in stock, delivering strong sales and gross margin growth across all our brands,” he said.

“The group has successfully enabled customers to shop seamlessly either online or in-store during the COVID-19 health crisis. This has been achieved through the long-term strategic investments made in our online capability combined with our ability to reach mutual agreements with landlords to appropriately re-base rents.”

Cheaper rents were also called out by Premier as a key reason for its higher earnings forecast, along with a 3.8 per cent increase in gross margins and continued heightened demand for its products online.

“The expected record FY21 EBIT result in today’s announcement is a great credit to the experience and dedication of our entire global Premier Retail team and our exceptional executive management, led by CEO Mark McInnes,” Mr Lew said.

“The board and I are extremely proud of our entire Premier Retail team, and their diligence during these challenging times.”

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