Premier Retail sets record guidance as Covid strategies pay off

Smiggle sales have be strong as stores reopen.

Premier Retail has increased its profit guidance after recording global sales growth of 70 per cent in the 18 weeks to June 5, compares with the same period last year. 

CEO Mark McInnes said the achievement reflected the success of its supply chain focus, integration of brands’ online and offline channels, and successful negotiation with landlords over rents while the Covid pandemic impacted trading.

“The strategic decision taken last year by the chairman (Solomon Lew) and I to build our supply chain and significantly invest in wanted inventory for Easter, April school holidays, Mother’s Day and the winter season has ensured we are in stock, delivering strong sales and gross margin growth across all our brands,” said McInnes. 

“The group has successfully enabled customers to shop seamlessly either online or in-store during the Covid-19 health crisis. This has been achieved through the long-term strategic investments made in our online capability combined with our ability to reach mutual agreements with landlords to appropriately rebase rents.”

While this year’s growth is in part due to a low base because of widespread lockdowns 12 months ago, the company’s performance is actually even better when compared to the same period in the 2019 financial year. 

Premier Retail said today that it expects earnings before interest and tax for the 53 weeks to July 31 to be in the range of $340 million to $360 million. That equates to an increase of between 82 per cent and 92 per cent on the underlying FY20 EBIT of $187.2 million, and between 103 per cent and 115 per cent on the underlying FY19 EBIT of $167.3 million, the latter two both 52-week periods.

McInnes said Mother’s Day sales set a new record for the group, helping drive strong overall May sales. 

“The expected FY21 EBIT range is currently being driven by strong customer demand for the winter product ranges across all brands; strong online sales growth and highly profitable online performance; exceptional gross margin expansion with the second half to date up over 380 bps on both 2H20 and 2H19; and a strong cost-control culture including continuing to reach agreements with landlords that appropriately rebase the group’s rent expense.”

But he cautioned that the current trading environment remains “extremely volatile” given the ongoing impact of Covid-19 on global operations.

Currently, most of the group’s stores have resumed trading across most markets. 

In Victoria, 228 stores were closed on May 27 in line with Victorian government-mandated restrictions, with 49 in regional Victoria reopening on June 4, and the balance in the Melbourne metropolitan area trading again from today. 

All 122 Smiggle stores in the UK and the Republic of Ireland reopened during April and May after being closed for up to three months, however operations in Asia have been severely restricted due to trading restrictions in markets including Malaysia, Singapore and Vietnam. 

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