Premier Investments Ltd (ASX: PMV) holds a number of investments across Australia including a 25.5% stake in the electrical appliance wholesaler Breville Group Ltd (ASX: BRG) and 31.2% in the department store chain Myer Holdings Ltd (ASX: MYR). They also operate two flagship brands Peter Alexander and Smiggle.

Until recently they also had a controlling interest in Just Group Ltd, which they acquired in 2008, which includes the brands Just Jeans, Jay Jays, Jacqui E, Dotti and Portmans.

The company has over 10,000 employees with 1,163 stores across 6 countries (as at July 2024), as well as wholesale and online outlets.

Financial Performance

On Friday 21st March, Premier Investments released their half year results for the period ending January 25, 2025. Premier reported a statutory net profit after tax (NPAT) of $117.1 million for Continuing and Discontinued operations, a decrease of 34.0% compared to 1H24. The company’s earnings before interest and tax (EBIT) for Premier Retail, stood at $162.0 million, down 20.9% from the previous year. The results reflect a challenging retail environment, with consumers facing increased cost-of-living pressures.

Their investments over the period include $1.33 billion in Breville receiving $6.2 million in cash dividends, $68.9 million in property, specifically their Premier Retail head office and Australian Distribution Centre.

Sale of Apparel Brands to Myer

A major highlight of the period was the successful sale of Premier’s Apparel Brands to Myer, i.e., and acquisition of Just Group Ltd by Myer. Premier entered into a binding share sale and implementation agreement with Myer on October 29th, 2024, the transaction was completed on Sunday January 26th, 2025, included an in-specie distribution of Myer shares to Premier shareholders, valued at $1.03 billion, along with $387.1 million in franking credits.

Premier shareholders received 7.2021 Myer shares for every Premier share held, allowing them to benefit from value creation in the deal as it was expected (at the 29/10/2024) that the sale would generate benefits of at least $30 million in earnings for Myer.

The sale of Apparel Brands to Myer includes the brands Just Jeans, Jay Jays, Jacqui E, Portmans and Dotti. Continuing operations of Premier now consists of Peter Alexander and Smiggle, this is intended to streamline their international growth opportunities for these brands, which is the core of their operational and growth strategies moving forward.

While total EBIT for continuing and discontinued operations was down 20.9%, their EBIT for Continuing Operations (Peter Alexander and Smiggle) stood at $129.4 million, down 16% compared to -35.8% EBIT for their Discontinued Operations (to $32.7 million). Gross profit for Continuing Operations was down 2.6% (to $308.5 million) compared to -5.1% (to $229.5 million) for Discontinued Operations, and a reduction in sales by 1.8% (to $455 million) and -3.2% (to $402.9 million) respectively.

Premier entered into the binding sale agreement in October, however the sale was completed in January 2025, one day after the half year period ended, this assures that the performance metrics from Discontinued Operations include the whole period, effectively confirming that downturns in financial performance from those brands were due to a reduction in their performance and not from early discontinuation.

Focus on Core Brands: Peter Alexander and Smiggle

Following the sale, Premier Investments will focus on its high-margin brands, Peter Alexander and Smiggle. Peter Alexander achieved record first-half sales of $297.7 million, up 6.6% from 1H24, driven by strong performance across all product categories and key shopping events. The brand also expanded its retail footprint with new stores and relocations, including the launch of its first UK stores. This brand has more than doubled its sales over the last 5 years from $144.7 million in 1H20 to $297.7 million in 1H25, at a CAGR of 15.5%.

Its retail store and online channels delivered strong growth, as well as its outlet store channel driven by investment in its expansion. The brand continues to deliver strong growth also in key shopping events yearly such as Father’s Day, Black Friday & Cyber Weekend as well as 10 days pre-Christmas and Boxing Day sale periods.

Premier is also focusing on investing in its retail channels with 4 new stores opened in Australia during 1H25, and 4 relocations/expansions, their major opening in this period was the flagship Chadstone store relocation and expansion (over 50%) to 429m2.

They launched their UK website and 3 stores in London during 1h25 which opened in time for the key Christmas trade period, and the company reports potential opportunities for an additional 10 stores to be opened over the next few years.

Smiggle, despite a 14.5% decline in global sales to $157.3 million, showed positive early sales momentum in 2025, particularly during the back-to-school campaign. The brand continues to innovate with new product ranges and plans for further global expansion through proprietary stores and wholesale partnerships.

Premier is currently investing in customer research for its Smiggle brand and is reviewing its existing loyalty program. During 1H25 they opened 2 new stores while 4 were closed, bringing the brand to a total of 307 stores across Australia, New Zealand, UK, Ireland, Singapore and Malaysia. They have announced there is potential for an additional 10+ stores to be opened soon hoping to utilise their existing team and infrastructure.

On September 23rd Smiggle signed an agreement an existing wholesale partner for the opening of 60 freestanding stores across the United Arab Emirates, Qatar, Kuwait, Oman and Bahrain. They also signed an agreement to open over 100 freestanding stores in Indonesia within the next 10 years.

Retail and Consumer Discretionary Struggling to Grow with High Cost-of-Living

Retail month-on-month sales have increased only slightly in January at 0.3% after a -0.1% decline in December 2024 while YoY sales stood at 3.8% in Jan, down from a 5 year high at 24.8% in April 2021.

The retail industry has struggled with slumped sales growth as cost-of-living pressures consumers; however, some improvement can be seen in a 4% increase in consumer confidence in March 2025, and a 0.5% increase in consumer spending over QoQ leading up to December 2024, disposable income was also up 1.4% in Q4 2024, and consumer confidence is up 4% in March 2025.

Consumers are challenged with increased rent, with rent inflation increasing to 6.4% in Q4 2024, mortgage rate increased 6.15% in January 2025, trending up 6.13% over the last three months, and interest rates still around a five year high of 4.35% (currently at 4.1%). The Consumer Price Index has risen 3.70% YoY (Dec 2024), increasing to 139.40 points, and has increased 14.92% over the last 3 years from 121.3 points in Q4 2021.

Although CPI has risen significantly and is still rising, it’s rate of growth has slowed down drastically to an average of 0.4667% over 3 months (Q2 to Q4 2024), from a high of 1.9% (average over 3 months from Q1 to Q3 2022).

Overall, the sector and retail industry are still struggling in recovery of the worst, although there are signs of improving economic conditions.