World is Smiggle’s ‘oyster’ boasts Premier

admin | 苏州桑拿
12 Dec 2018

Premier Investments believes the world is “Smiggle’s oyster” as it gears up to name the next international territory for its runaway kids stationery label by September.

Premier chief executive Mark McInnes said the shortlist for the next leg of Smiggle’s international expansion included North America as well as Asia but insiders suggest Europe is the most likely next stop.

The Solomon Lew-controlled retailer will open more than one new Smiggle store a week for the next two years and that does not includes the planned expansion into the Republic of Ireland which was announced as part of its first-half results on Tuesday.

Premier is confident Ireland could support as many as 20 Smiggle stores in the next three years and it has already signed off on two sites and talks are under way regarding a further three store openings before Christmas.

“The great advantage that Smiggle has is that the world is its oyster, they’re all great markets and what we want to chose is the one that gives us the best returns for shareholders in that time frame,” Mr McInnes said.

“We will come back with an announcement about what we see as the next biggest growth opportunity for Smiggle, probably at the full-year results.” Not bidding

Premier has also counted itself out of any bidding process for Wesfarmers’ Officeworks chain after chairman Mr Lew said it didn’t “have an interest” in the operation.

Smiggle is the stand-out star of Premier’s retail stable, along with leisure wear label Peter Alexander. Those two brands accounted for the lion’s share of Premier’s half-year sales and earnings growth, according to broker Citi, as the company declared a 26?? dividend, up 13 per cent on the previous year.

Citi’s head of research Craig Woolford said Premier continued to enjoy strong growth from Smiggle and Peter Alexander and cost savings offset falls in its gross margin in the first half.

“Premier effectively managed employee and rental costs in order to offset gross margin declines, employee expenses grew at a slower rate than store growth,” Mr Woolford said.

Analysts calculate Smiggle and Peter Alexander account for 60 per cent of Premier’s profit and this proportion is expected to keep expanding. Tough conditions

Behind its rock-star brands, Premier’s apparel business appears to have been hit by the same conditions that triggered the collapse of six high-profile n fashion brands since December, including Marcs and Herringbone.

Four of its fashion labels reported a fall in total sales in the half, including Jay Jays, Dotti, Jacqui E and Portmans, which suffered a 5.8 per cent slump in total sales to $58.9 million for the half.

Premier has installed a new leadership team at Portmans, including Linda Levy as the new group general manager and two new merchandise mangers to sharpen its focus on product.

One analyst said Premier’s first-half performance was a “credible result” but he said the 73 basis point decline in gross margin suggested the margins for the worst performing apparel brands slumped by as much as 100 basis points.

“I think some of those brands, on their own would have pretty horrible results,” the analyst said. Amazon dismissed

Mr McInnes said Premier was not hit by soft January sales as reported by other apparel companies and it remained fully committed to all its apparel brands. iFrameResize({enablePublicMethods : true, heightCalculationMethod : “lowestElement”,resizedCallback : function(messageData){}, checkOrigin: false},”#pez_iframeA”);

“It was really only one of the brands that we were disappointed in and that was Portmans … and that has nothing to do with the health of the business,” Mr McInnes said.

And he foreshadowed a positive second half thanks in part to favourable timing of Easter, school holidays and Mother’s Day.

Premier held up the strong performance of its Smiggle online operation in the UK, one of the most fiercely competitive online markets in the world as proof it could take on Amazon and succeed.

Mr McInnes said the launch of Smiggle online had been nothing short of “exceptional” and it gave the business great confidence it could compete with global online giant.

“I think it’s been a bit lost in the commentary on Amazon, we are the owner of all our brands, we design, source and supply all our own brands and Amazon can’t sell our brands if we don’t sell it to them,” Mr McInnes said.

Premier’s net profit edged just 0.46 per cent higher in the half to $71.9 million, hit by one week’s less trading as well as a $3 million litigation cost as a result of its failed action to prevent its former chief financial officer from working for Cotton On.

First-half comparable store sales were 2.1 per cent higher, building on its record, 6.9 per cent like-for-like growth in the first half of 2016.

Total sales grew by 7.1 per cent to $588.6 million, an increase of 7.1 per cent on the pervious first half.

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