The Premier Investments Limited (ASX: PMV) share price is under the spotlight after the retailer reported its FY24 result.
Premier Investments owns a number of retail brands including Smiggle, Peter Alexander, Just Jeans, Jay Jays, Dotti and more. It also has substantial investments in Breville Group Ltd (ASX: BRG) and Myer Holdings Ltd (ASX: MYR).
FY24 result
Here are some of the highlights from the 2024 financial year report:
- Premier Retail sales down 2.9% to $1.6 billion
- Premier Retail EBIT down 6.9% to $340.9 million
- Adjusted net profit after tax (NPAT) down 12.3% to $244.4 million
- Statutory (NPAT) down 4.9% to $257.9 million
- Final dividend per share up 16.7% to $0.70
- Full-year ordinary dividend up 16.7% to $1.33 per share
Premier Retail managed to deliver an increased gross profit margin, with a rise of 35 basis points (0.35%) to 62.6%. Operational efficiencies largely offset inflation pressures, leading to the cost of doing business increasing by just 1.7%.
However, the apparel brands saw sales decline 6.4% year on year.
Peter Alexander sales grew by 6.2% to $508.6 million. Nine new stores were opened in Australia. It’s planning to launch in the UK in the first half of FY25, with three stores planned for opening by November in London. It has identified opportunities for up to 10 new stores for the short-term.
The ASX share said Smiggle is facing a challenging discretionary retail environment – sales fell 7.4%. Smiggle has 43 fewer stores than FY19. Premier Investments believes the business has a “significant runway for further growth through proprietary store expansion and evolving the current wholesale model.”
During FY24, Smiggle has signed agreements with wholesale partners to open 60 freestanding stores in the Middle East and over 100 freestanding stores in Indonesia.
Strategic review
Premier Investments said it is prioritising exploring Myer’s approach of a proposed combination with Premier’s apparel brands business.
The company said it continues to see positives in the potential demerger of Peter Alexander and/or Smiggle. However, the board isn’t working towards the demerger of Smiggle by the end of January 2025. The timing of a demerger will depend on the outcome of the discussions with Myer.
Outlook for the Premier Investment share price
The company believes its businesses are well-positioned to maximise future EBIT growth.
Peter Alexander has identified at least 20 additional opportunities for new and larger format stores in existing markets, as well as the offshore opportunities including the UK.
Smiggle has identified at least ten opportunities for new stores in existing markets and it’s exploring future offshore markets, as mentioned above.
With the apparel brands, Premier wants to deliver “continuous improvement in product, sourcing and margin”. A new loyalty program is planned to launch in October 2024. It’s also “optimising the store portfolio and exploring new store formats.”
With the Premier Investments share price down 6% in early trading, I think the company is a more appealing opportunity. I believe it’s one of the best retailers on the ASX, so I’m going to consider it as an investment after this selldown and the plans for ongoing growth.
