The Premier Investments Limited (ASX: PMV) share price has shot up 5% this morning after providing a record first-half trading update.
Premier Investments owns retail brands including Peter Alexander, Smiggle and Just Jeans.
PMV share price
Another record half
Key highlights for the first half ending 29 January include:
- Estimated sales of $769 million, a marginal 0.5% improvement on the prior corresponding period (pcp)
- Estimated online sales of $195 million, up 27% on the pcp
- Estimated earnings before interest and tax (EBIT explained) of $209.5 to $211.5 million, a 4.2% to 5.3% pcp improvement
The company noted improvement in the performance of Smiggle, which had been impacted by pandemic restrictions on schools.
Management also called out ‘outstanding’ performance from Peter Alexander and a solid result from Portmans.
“Premier is particularly pleased with this strong result given that the Group’s stores were closed for over 42,000 trading days during the half due to government mandates imposed in response to the COVID-19 pandemic”
The business will release its audited first-half result in late March 2022.
Costs down, profits up
While almost every company is noting increasing costs (see Kogan, Accent and Fortescue), Premier is one of the select retailers to grow profits faster than revenue.
Accent (ASX: AX1) shares on watch as first-half profit plunges 62%
The growth in profits is attributable to renegotiated rental contracts with landlords.
Premier has been able to leverage its brand strength and growing online sales base to achieve more favourable leasing terms.
As a result, more money is left on the table for earnings.
It has even been willing to walk away, illustrated by the exit of four stores at Mid-City Arcade in the Sydney CBD:
“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”
My take
Who would have thought dog bone rubbers had such growing demand?
Premier is absolutely humming right now. Today’s result also confirmed that the pandemic bump it received in 2020 and 2021 looks here to stay.
When its competitors are calling out logistics, supply chain and a myriad of other expense increases, Premier is posting record profits.
Overall it’s a phenomenal result by the business, which doesn’t even include its 28% stake in Breville Group Ltd (ASX: BRG).
If you’re looking for new share ideas, check out four ASX shares I’m watching in 2022.
