Solomon Lew’s Premier Investments has once again spoken out about Australia’s unworkable commercial rents, threatening to pull the company’s brands from shopping centre sites where global competitors are offered cheaper rates.
On Friday, Premier Investments revealed its half-year earnings, reporting an underlying record net profit of $110.5 million before tax for the first half of 2018. The profit is an increase of 9.9% in comparison to the first half of 2017. Total sales have grown by seven percent, to $630.1 million.
The most valuable players for Premier Investments in the half include Smiggle, with global sales of $170.1 million, and Peter Alexander with $114.4 million. Retail brands Just Jeans and Dotti slumped in sales, with a drop of 3.6% for Just Jeans. The company said it was “extremely disappointed in Dotti’s performance and believes it can do much better”.
Alongside disclosing its financial earnings, Premier chief executive Mark McInnes once again pointed out how international players like H&M, Forever New and Specialty Fashion Group have been offered better deals on rent.
In 2017, the company pulled its Portmans flagship into Melbourne’s Bourke Street Mall over rents, saying it was the landlord’s fault after being unwilling to negotiate on price.
Last week, the company took aim at big shopping centres it believes are still offering better deals to global entrants, saying it would leave more sites if the practice continued.
“Unless those same landlords offer us the same rent and capital, then we will escalate the closure of all our brands in that centre, and in the landlord’s future development pipeline,” McInnes said, reports Fairfax.
“Given [we] are their largest partner, we expect to be treated as their largest partner and to be treated the same as other companies.”
McInnes blamed rent costs on shopping centres failing to keep up with the reality of Australia’s retail sector, claiming Premier had to close down 80 stores because “landlords have failed to provide market rents in a changing industry”.
“Where landlords do not continue to invest in overall shopping experiences and/or adjust their rent expectations in line with the performance of their own centres and the major shift in consumer behaviour, further store closures will be necessary.”