The start to FY25 has “remained challenging” following an FY24 ridden with headwinds.
Premier Investments chairman Solomon Lew shared these sentiments with his shareholders today, adding that there are glimmers of hope for its core retail subsidiaries including Peter Alexander, Smiggle and The Just Group.
“We have previously highlighted the structural shift in retail shopping patterns as consumers continue to migrate towards key promotional periods,” Lew said.
“In particular Black Friday has become a key focus for both consumers and retailers.
“Global sales for the 3-week trading period of Black Friday/Cyber Monday, while challenging, have not disappointed.
“That said, given the 1H25 result will also rely on the remaining key trading events of Christmas, Boxing Day, and January and Back-to-school sales, we cannot view Black Friday performance in isolation from trading through this important period.
“Our experienced team is well prepared for the critical weeks to come.”
This comes after what Lew said will be remembered as a “very challenging” financial year, FY24.
Earlier in his speech, Lew said consumers in all its markets - which includes Australia, New Zealand, Asia and Europe - faced high interest rates, high inflation and significant cost of living pressures across FY24.
Against this backdrop, Premier’s net profit after tax fell by 4.85 per cent in FY24 to $257.9 million, with Lew highlighting that this is up by 140 per cent on FY19.
Meanwhile, its earnings before interest and tax was $325.9 million, a fall of 8.6 per cent on FY23, and up 94.8 per cent on FY19.
“Premier Retail’s profit contribution was delivered off $1.595 billion in global sales for the year,” Lew said.
Gross margins for the year increased 35 basis points to 62.6 per cent. “Pleasingly operational efficiencies largely offset inflationary pressures, with cost of doing business for the retail segment up only 1.7 per cent on FY23.”
The other glimmer of hope for Premier Investments is the proposed combination with Myer, with shareholders at both Premier and Myer having the final say on whether it goes ahead or not.
As part of the deal, Myer will acquire five apparel brands under the Just Group - Just Jeans, Jay Jays, Portmans, Dotti and Jacqui E - in exchange for 890.5 million new, fully paid ordinary shares in Myer for Premier.
Lew will join the board of Myer as a non-executive director as part of the transaction, in addition to his current role at Premier.
To sweeten the deal, Premier will also hand over $82 million cash to Myer.
“The combination of the Apparel Brands business with Myer is an opportunity for us all to play an important role in the future of the Australian and New Zealand retail landscape,” Lew told shareholders today.
“The combination of Myer and the Apparel Brands will deliver enhanced scale to the combined group, more opportunities through loyalty, and extract growth throughout the design, sourcing and distribution process.”
The next steps in the process will involve Premier sending details of an Extraordinary General Meeting planned for late January 2025, together with an explanatory booklet that sets out important information about the transaction and proposed shareholder resolutions.
Following the transaction, if it goes ahead, Peter Alexander and Smiggle will remain under the ownership of Premier, “where a dedicated focus on the significant local and international growth opportunities for these unique brands will benefit both brands and ultimately Premier shareholders.”
“Premier will also continue to have a strong balance sheet and will retain flexibility to pursue a demerger of Peter Alexander and/or Smiggle in the future,” Lew concluded.