This article is from the Australian Property Journal archive
BILLIONAIRE Solomon Lew’s Premier Investments posted an 89% increase in first half net profit and reminded unrealistic landlords that it is not afraid to walk away from its stores.
The group, which owns Peter Alexander, Smiggle, Just Jeans and Portmans, posted a $188.2 million profit as sales lifted 7.2% on the prior corresponding period to $784.6 million.
It again baulked at handing back the nearly $15.6 million “net benefit” in JobKeeper payments received from the federal government, saying the second Victorian lockdown closed 216 stores for most of August, September and October and meant it lost $44.0 million in store sales and corresponding gross profit of $28.5 million on the same period the previous year.
Premier recorded online sales of $156.7 million, up 61.3%, and its online business contributed 20% of total Group sales for the half and continues to deliver significantly higher EBIT margins than its retail stores. Sales growth has continued into the first seven weeks of the second half, up 61.9%.
“The accelerated swing in customer preference to shopping online has further increased Premier Retail’s focus on each store’s profitability. Premier Retail has closed 162 stores over the past seven years including 51 stores in the last 12 months, demonstrating the group’s willingness to walk away from stores with unrealistic rents that deliver unprofitable sales,” it said.
“Pleasingly, many landlords recognise the long term financial strength of Premier and its seven iconic brands.”
Lew was a combative tenant from the beginning of the pandemic, declaring outright that the group would not pay rent across its 900 retail stores when it extended their shutdown during the national lockdown.
During the half, Premier reached mutual agreement with landlords that rebased the group’s first half normalised rent to 12.7% of sales, a reduction of 318 basis points on the prior corresponding period.
“Premier Retail maintains maximum flexibility in reviewing each store’s profitability, with over 70% of its global store network either in holdover or with leases expiring in less than 12 months.”
The group owns is Australian distribution centre, which has allowed it to scale up its online fulfillment when needed, and said plans have commenced to expand this facility in 2022.
