Premier expecting bumper earnings

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THE ongoing surge in online retail sales has Solomon Lew’s Premier Investments expecting a first half increase in earnings of up to 85%.

The retailer, which owns Just Jeans, Portmans, Dotti, Jacqui E and Jay Jays, said yesterday in a trading update that its EBIT will be between $221 million and $233 million, between 75% and 85% higher than the same period last year. Its first half runs from August to 30th January.

Online sales in the first 24 weeks of the half, ending 21st January, shot up 60% to $146.2 million. They contributed 20.4% to total group sales, well above 13.4% one year ago.

The group’s online sales deliver a significantly higher EBIT margin than the EBIT margin of the retail store network, largely to owning its distribution centres.

Total sales in the 24 weeks were $716.9 million, up 5.0%. Global like-for-like sales were up 18.0%, with Australian sales growth even stronger, up 26.2%.

Premier Investments qualified for the first phase of Jobkeeper, which included payments in its first half period. The group created headlines early in the pandemic when Solomon Lew declared the group would not pay rent on any of its stores while they were shuttered during lockdown, and wielded its bargaining power through holdover leases as it challenged landlords to bring down rent rates.

It also attracted controversy for paying full 70% per share dividends and handing Mark McInnes a $2.5 million bonus for the 2020 financial year, despite receiving nearly $70 million in Jobkeeper payments during the period.

At different times during the half, it was government mandated that Premier Retail temporarily close stores in Melbourne, Regional Victoria, Auckland, Adelaide, Sydney’s Northern Beaches and Brisbane. In addition, in England, Scotland, Wales, Northern Ireland, the Republic of Ireland and most recently Malaysia, Premier Retail stores are currently closed due to government directions.

Premier said the loss of gross profit in Victoria during government enforced store closures for most of the September quarter “more than offset the wage subsidy support”. The group was not eligible to receive the second phase of JobKeeper.

“Premier Retail’s priority has been to support our team members, keep them in jobs and connected to the business during this once in a century health crisis. As a result, Premier Retail incurred significant incremental costs by continuing to pay over 1,200 of its full time and part time Australian team members their contracted hours whilst those teams were stood down due to government enforced temporary store closures in October, November, December 2020, and January 2021.

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