25-Sep-2020:  FY20 Results Announcement   plus   FY20 Investor Presentation   and   Preliminary Final Report

PREMIER INVESTMENTS NPAT OF $137.8 million, UP 29.0%

PREMIER RETAIL UNDERLYING EBIT OF $187.2 MILLION, UP 11.9% * **

FULL YEAR DIVIDEND OF 70 CPS

Highlights for FY20

• Premier Investments Group NPAT $137.8 million, up 29.0% on FY19
• Premier Retail Underlying EBIT up 11.9% to $187.2 million * **
• Premier Retail LFL sales up 7.6% (constant currency) with total sales of $1.22 billion down 4.3% on FY19
• Record Peter Alexander sales up 16.3% to $288.2 million
• Record Online sales of $220.4 million, up 48.8% on FY19 (2H20 up 70% on 2H19) and contributed 25.5% of 2H20 total Premier Retail sales
• Premier’s stake in Breville at a market value of $1.0 billion as at 11 September 2020 (Balance sheet value $257.4 million)
• COVID-19 is accelerating the retail industry restructure. Premier Retail is best placed to maximise this customer led change through its highly profitable online channel and flexibility within its property portfolio. The acceleration of online has continued into FY21 with Premier Retail online sales up 92% for the first six weeks

Commentary

Premier Investments Chairman, Mr Solomon Lew, said:

“Throughout the devastating COVID-19 global health crisis, our absolute priority has and continues to be the safety and wellbeing of our teams and our customers. The Board and I are extremely proud of the dedication and professionalism displayed by all of our employees during these unprecedented times of hardship and uncertainty.”

Premier Investments Limited (“Premier”) today reported net profit after tax (NPAT) of $137.8 million for the 52 weeks ended 25 July 2020 up 29.0% on FY19 (FY19: $106.8 million).

Premier Retail delivered record underlying earnings before interest and tax (EBIT) of $187.2 million, up 11.9% (FY19: $167.3 million) * **.  Premier Retail like for like (“LFL”) sales were up 7.6% (constant currency) for the year with total sales down 4.3% to $1.22 billion (FY19: $1.27 billion).  Premier Retail’s underlying EBIT margin for the year was 15.4%.

Executive Director and Premier Retail CEO Mr Mark McInnes, said:

“Our record result during this global health crisis is no accident but rather a function of our targeted strategic investments over the last decade, our high quality culture and the commitment of our global teams together with the strong support of our suppliers.

“Premier Retail’s FY20 underlying EBIT was delivered through two very different halves. In 1H20, ended 26 January 2020, Premier delivered record sales and EBIT, significantly outperforming the broader retail market. In 2H20 the Group was severely impacted by COVID-19 and our result has been delivered by a nimble, flexible and dedicated team who have been prepared to make the very hard decisions for the long term health of the Group.”

Notes:

1. (*) The Statutory results for FY20 reflect the adoption of the new Accounting Standard AASB 16 Leases.  To allow for prior period comparison, FY20 results disclosed in this presentation unless otherwise stated are pre adoption of AASB 16 (“Pre AASB 16”) and therefore exclude the impact of AASB16.  Refer Premier Investments Limited FY20 results presentation for reconciliations of Statutory and Pre AASB 16 results.
2. (**) Refer to Appendix for details regarding significant and other one-off items excluded from underlying results.

--- click on links at the top for more ---

[I hold PMV shares.  I mentioned here last month when they provided their positive Retail division update that I figured their Investment division would perform strongly in FY20 due to the very strong Breville (BRG) performance.  PMV and Solomon Lew together own one third of BRG, and PMV's share of BRG was worth $1 billion at 11-Sep-2020, being around one third of PMV's entire market capitalisation.  The performance of BRG is therefore very significant in determining whether Premier Investments will have a good year or not.  Both PMV and BRG had a good FY20.]

13-Aug-2020:  Premier Retail 2H20 Trading Update

Following Premier Retail’s record 1H20 result, Premier Retail today provides an update on trading for 2H20 (26 weeks ended 25 July 2020).

As a direct result of the impacts of COVID-19, Premier Retail global sales for 2H20 were $484.2 million, down $106.5 million or 18.0% on 2H19. Despite the headline drop in sales and related decline in gross profit, Premier Retail’s online sales and EBIT growth have continued to accelerate to deliver record earnings.

Premier Retail’s online sales of $123.3 million for 2H20 were up $50.8 million or 70% on 2H19 and contributed 25.5% of Premier Retail’s total 2H20 sales (2H19: 12.3%). Premier Retail’s online sales deliver significantly higher EBIT margin than the EBIT margin of the retail store network. Full year FY20 online sales were $220.4 million, up 48.8% on FY19 and contributed 18.1% of Premier Retail’s total FY20 sales (FY19: 11.7%).

Premier Retail now expects 2H20 EBIT to be between $58.7 million and $59.7 million, up between $5.2 million and $6.2 million or between 9.7% and 11.7% on 2H19, as a combined result of:

• The very difficult decision to shut down its global operations and the significant benefit of the subsequent hard cost out programs;
• The very significant online EBIT growth achieved;
• Strong sales growth and subsequent significant gross margin from wanted product since gradual re-opening globally; and
• Maximising the significant various global government rent and wage subsidy schemes announced only after Premier Retail’s global shut down (26 March 2020).

As a result of the strong second half EBIT, Premier Retail now expects FY20 EBIT to be between $184.8 million and $185.8 million (FY19 underlying EBIT: $167.3 million), up between $17.5 million (10.5%) and $18.5 million (11.0%) on FY19.

Premier Investments Limited has and continues to maintain a strong balance sheet. The above trading update relates to Premier Investments Limited’s wholly owned Premier Retail segment and does not include any results from its investment division.

The sales and EBIT numbers stated in this release are subject to audit, based on a “pre-AASB 16” basis and do not take into account potential asset value impacts resulting from COVID19.

Premier Investments Limited expects to release FY20 results in late September 2020.

--- click on the link above for the full announcement - including an impressive graph of their Online Sales Growth and their Online Sales as a percentage of their Total Sales ---

PMV is 42.43% owned by Century Plaza Investments, which is owned and controlled by billionaire Solomon Lew.  PMV also has Perpetual (PPT, with 9.97%) and Airlie Funds Management (owned by Magellan Financial Group, MFG, with 7.8%) on their share register.  

The above trading update involves Premier Retail, and it would appear that COVID-19 hasn't really done them much harm at all, if anything it appears to have accelerated their move to online (I think they're probably going to be 100% online eventually, or close to it), and their FY20 before-tax earnings (EBIT) has risen by between 10.5% and 11% (compared to FY19).  However, the other side of PMV is the investment side of the business - and I would imagine there are mixed results there.  For instance, PMV own 10.77% of Myer (MYR), which has lost two thirds of its market cap since September 5th when they were trading at 63 cps (now 21 cps, down by 66.7%); However PMV also own 33.4% of Breville Group (BRG) and BRG is up +64.3% over the same period ($16.61 on Sep 5, $27.29 on Aug 12).  Many may not realise that Breville (BRG) is now a $3.7 BILLION dollar company, whereas Myer (MYR) has a market cap now of only $164M and has become a microcap company.  Therefore, the paper losses that Solly (and PMV) has endured with his one tenth of Myer this past year are almost insignificant compared to the huge paper profit that he's made out of owning one third of Breville.

Unfortunately, I don't currently hold PMV - you can't pat all the fluffy dogs - but they're certainly on my Strawman.com scorecard.  I have held PMV before, and will do again, I replaced them in my super fund earlier this year with Regis Resources (RRL), and I'm so far up almost +60% on RRL, but when I rotate some money back out of gold producers, PMV is right at the top of my "buy list".

Something else to keep in mind is that Premier (PMV) have a very healthy franking credit balance, courtesy of some good strategic prior acquisitions, so will be able to keep franking their dividends at 100% well into the future despite having increasing earnings generated from outside of Australia - mostly due to their very successful global Smiggle roll-out.

12-May-2020:  Premier Investments Ltd - COVID-19 update

21-Apr-2020:  Premier Investments Limited COVID-19 Update

Excerpts:  

Our decision to temporarily close our retail stores is consistent with the clear message reiterated by the Prime Minister that the population should only leave the house when it is absolutely necessary to go out. As the Premier of Victoria has stated, no shopping trip is worth a life. Whilst our seven brands do sell much loved discretionary products, it is irrefutable that we are not an essential retailer. 

Premier has no choice but to continue the temporary closure of our retail stores in Australia. Accordingly, our retail stores will remain closed until at least 11th of May 2020. 

This means that our existing stand down will also continue during this period. We welcome the Federal Government’s JobKeeper program in Australia and the Wage Subsidy Scheme in New Zealand and have taken urgent steps to access these subsidies for the benefit of all our eligible employees. 

As previously announced, in Australia and New Zealand, close to 70% of our stores are already in holdover or with leases expiring in 2020. These extraordinary circumstances provide Premier with maximum flexibility. Premier intends to continue not paying any rent globally for the duration of the shutdown.

Premier looks forward to opening our retail stores at the earliest possible time. Shopping centre landlords are responsible for creating a healthy and safe environment. It is incumbent on them to demonstrate and announce the actions they are taking to ensure a healthy and safe environment for our employees and customers. These health and safety measures are critical to allow non-essential retailers to start trading when restrictions are eventually eased by governments. We will work closely with shopping centre landlords to ensure that appropriate safety measures are implemented in a timely manner. 

All seven of Premier’s brands are currently trading strongly online in Australia.  Premier will continue its online trade in Australia during its temporary store closure. 

On 20 April 2020, the New Zealand Prime Minister announced that New Zealand will move from Alert Level 4 to Alert Level 3. This will mean the temporary shutdown of our stores in New Zealand will continue until at least 11 May 2020. Pleasingly though, Premier Retail looks forward to being able to start trading online in New Zealand through all its New Zealand transactional websites from 28 April 2020.

We are continuing to monitor all developments closely. Premier, with the support of all our employees, will overcome this global health pandemic and bounce back and thrive at the earliest opportunity. 

--- click on link above for more ---

26-Mar-2020:  Premier Investments Limited COVID-19 Update

PMV who own a variety of brands - including Smiggle - are temporarily closing all their retail stores in Australia from 6 pm (local time) today, 26 March 2020 (today), until 9 am (local time) Wednesday 22 April 2020 (so for 4 weeks).

"This follows similar decisions we have been forced to take in New Zealand, the United Kingdom, and Republic of Ireland. 
 
Regrettably, this means all employees in Australia are to be stood down, except for a small number of employees required to perform limited essential work. This means our team members will not attend work and will not be paid. We have put in place special arrangements for employees to access accrued annual and long service leave entitlements to reduce the impact over this time. 
 
Globally these closures will impact over 9,000 of our employees."

As we have seen in many other cases, PMV's SP is up on this news, not down, suggesting that the downside was already priced in.

This particular announcement has some other interesting stuff in it worth sharing:

"The CEO of Premier Retail, Mr Mark McInnes, foreshadowed the hardship this decision will bring to the entire workforce and supply chain.  Mr McInnes has voluntarily decided to work from home without pay or accessing any other entitlements for the period of the shutdown until the 22 April 2020. In addition, the entire Just Group executive team have been stood down and have agreed to work from home when required with either no pay or reduced leave entitlements.  
 
Similarly, Premier Non-Executive Directors have voluntarily decided to not receive any remuneration during this period. 
 
In Australia and New Zealand close to 70% of stores are already in holdover or with leases expiring in 2020 providing the Group with maximum flexibility. These extraordinary circumstances mean Premier intends not to pay any rent globally for the duration of the shutdown."

There's more, but I thought that part was particularly interesting. Particularly as PMV are in much better shape than a lot of other retailers.  Their last report showed that they had $100m of debt, but $200m of cash - as at 25th January 2020, plus they owned over $700m worth of Breville (BRG) shares and over $40m of Myer (MYR) shares (at 25-Jan-2020 prices).  While those BRG & MYR shares are clearly trading at much lower levels now than they were then, they had twice as much cash as debt - PLUS those shareholdings, so they have a VERY strong balance sheet and a very well placed to get through this.