The UK’s Brexit decision didn’t affect the sale of pencil cases, according to retailer Premier Investments – a fact that helped push the Solomon Lew-led brand portfolio beyond $1 billion in sales this year.
The 2016 financial year results for the group, which owns a suite of retail brands including Smiggle, Dotti, Just Jeans and Peter Alexander, showed net profit after tax was up 18% on 2015, to $103.9 million.
The darlings of the portfolio were Peter Alexander and Smiggle, both posting significant like-for-like product sales growth. Smiggle has already hit the United Kingdom, with 64 stores operating at the end of the 2016 financial year, and has also launched in Malaysia.
In a slide on the presentation about the impact of Brexit on UK Smiggle stores, Premier said the numbers were equal to or better than the time before Britain voted to leave the European Union. The retailer sees the Brexit decision as an opportunity to leverage sales further in Britain.
Meanwhile, Premier Retail chief executive Mark McInnes told media yesterday the company is exploring the option of further extending Peter Alexander overseas beyond New Zealand.
While cracking the billion dollar mark was a record, sales numbers didn’t excite investors, who received a fully franked full-year ordinary dividend of 48c (compared with 42c last year). The share price lost around eight percent after the profit result was announced. Premier chairman Solomon Lew described the result as “a very strong performance in a difficult retail environment”, but the final profit still fell short of forecasts, leading to shares being sold off yesterday.
Premier owns seven imprint brands but pyjamas and stationery are the clear priorities.
“Our strategy is unchanged and we continue to pursue it relentlessly,” said chief executive McInnes.
“Investing in Smiggle globally, growing Peter Alexander significantly, and delivering a superior online experience for our customers.”
The retail group was keen to congratulate its staff for improved online sales growth – up 39.6% for the year – however, the target for sales is still a relatively small portion of the overall takings in the past year. The target is to “further enhance” the group’s online capabilities to hit $100 million in sales by 2020 – a small segment of the $1 billion that was taken in 2016.
Growing a portfolio business
David Gordon, retail expert and managing partner at LZR, told SmartCompany that while retailers have created brand portfolios with varying degrees of success in the past, Premier will be constantly evaluating which of its companies lead the pack and where each company is in its life cycle.
“You would assume that they have a strategy for each brand,” Gordon says.
“Some will be young growth options, others will be the mature brands.
“It’s really more about lifecycle management and knowing when to grow. Take Just Jeans – when they came about, you thought you could buy your cool jeans there – that has been to some extent been replaced by discounters and department stores.”
Gordon says that while there is a tendency for brand identities to merge in retail portfolios, Premier Investments has been able to keep each store’s identity and draw on each individual brand.
“They’ve kept the brands mostly separate, in terms of CEOs and the management teams. They run their own show,” he says.