Solomon Lew’s retail empire to close 50 stores, flags online expansion
Monday, July 25, 2011/
Premier Investments, the owner of brands including Jacqui E, Just Jeans, Portmans and Jay Jays, says it will close 50 stores in its Just Group retail division and expand its online business to combat “challenging” retail conditions.
Highlighting the difficulties confronting bricks and mortar retailers as they battle weak consumer sentiment and online competitors, Premier says the recent school holiday period did not go as well as it hoped and has downgraded its guidance.
“Our business is highly school holiday dependent. We have not experienced the expected uplift from July school holidays across Australia and New Zealand that we experienced in April,” CEO Premier Retail Mark McInness says.
“In addition, margins have remained under pressure, as industry-wide discounting has increased.”
Solomon Lew, Premier Investment chairman and well-known Melbourne rag trader, described the performance as “disappointing” but tips a return to acceptable level of sustainable growth, should the retail environment not weaken.
Following a review of its business, Premier says it will now focus on online, which it describes as its largest store, by putting all of its brands online soon.
It did not say which stores would be closed, or how many staff members would lose their jobs. The company will also close state offices and change staff hours.
It now expects full-year earnings before one-offs to be in the range of $56 million to $66 million. This is the second downgrade for Premier, which downgraded its full-year earnings by up to $30 million in March to between $80 and $85 million.
Releasing its trading update for the six months to July 30, Premier Retail says like for like sales were up 0.9% for Australia and New Zealand, with Australia rising 2% but New Zealand down 2.1%.
Total sales were up 2.4% altogether for the half year, rising 3.6% in Australia but down 1.5% in New Zealand.
Premier, which has just completed a review of the business, also flagged one-off charges of between $14 and $16 million.
But in a vote of confidence for pyjama brand Peter Alexander, Premier says it will roll out between 15 and 30 stores over the next few years. There are likewise expansion plans for Smiggle, with between 30 and 50 new stores planned by 2014.
Retail expert Brian Walker, the Retail Doctor, says the announcement is an adaptation to the times.
“It’s also saying that they can no longer carry loss-making stores, but instead will focus on brands that are well received, highly differentiated, and have unique value propositions,” Walker says.
“Some brands are amorphous and mature, and possibly not worth the effort and capital to reinvest.”
“At the end of the day, they’re an investment house.”
On the job losses, Walker says traditional employment in retail is not what it used to be.
This article first appeared on SmartCompany.
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