Premier Investments (PMV)
HOLD

Sweet dreams

 27 Mar 2023
Sector: Consumer Discretionary

1H23 RESULT

Need To Know

  • Interim dividend 54cps, special dividend 16cps, payment date 26 July
  • 2H23 trading +7.7% on pcp first 6 weeks
  • Expansion for Peter Alexander

Premier’s interim result shows it is fully back to normal trading and looking for further growth opportunities.

Result. Modestly ahead of consensus expectations although retail EBIT fell -9% on 18% growth in sales. Retail gross margin fell 2.23% although the cause is not clear, possibly held back by weaker currency rates. Compared to pre-COVID, sales and earnings are strong, particularly in Peter Alexander. 

Dividend and Special. PMV has net cash of $470.4m and franking credits totalling $327m as of 28th January 2023. The Board has declared a fully franked interim dividend of 54cps and a special dividend of 16cps continuing the strong capital management demonstrated in 2H22 (final div 54cps, special 25cps).

Peter Alexander. 1H23 sales increased 15.1% to $261.7m. PMV sees this brand as a lifestyle and gifting brand with expansion possibilities. Four new stores opened in the period taking the total to 122 across Australia and New Zealand. PMV has identified 20-30 new opportunities for new and larger stores and has plans for offshore expansion. For the latter, a partnership agreement is close to being finalised with an ecommerce platform provider to expand to 35 countries and will launch in 1H24f.

Smiggle. On a smaller footprint of stores, Smiggle sales have recovered from the pandemic and is still looking for expansion opportunities.

Myer. PMV increased its investment in MYR during the period and now owns 22.9% of the recovering retailer. MYR’s recent interim result was a stark improvement on previous periods.

Investment View

PMV is comfortably past the pandemic with expansion opportunities once again on the agenda for Peter Alexander and Smiggle. The company’s higher inventory remains on watch having outpaced sales growth in the last three years.

PMV looks to have won the rent war with its total rent cost now down to 11.6% of sales compared to 15.9% pre-COVID.

We note the launch of Jacqui E Curve as an expansion into larger size women’s fashion.

At 16x FY24f EPS, PMV is fairly valued, in our view. 

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Stock Overview

Share Price

Company Overview

Premier Investments is a retail group including Smiggle, Peter Alexander, Just Jeans, Jay Jays, Portmans, Dotti, and Jacqui-E. The company has stakes in MYR and BRG.

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