Online Shift Keeps Lew’s Profits Up

Solomon Lew’s retail business Premier Investments looks set to pivot further into ecommerce by closing 350 stores, after record online sales helped post a 29 per cent lift in profits.

Premier, which owns Smiggle, Peter Alexander, Just Jeans, Dotti and Portmans, is set to emerge from the pandemic in stronger shape than ever, thanks to soaring online sales growth combined with the rent holiday and $68.7 million in wage subsidies.

In the early stages of the pandemic, when national restrictions were imposed, Premier stood down 9,000 workers across its network.

The retail group, which booked $137.75 million in the year ended 25 July, closed its Australian stores for six weeks between 26 March before reopening the last of its stores mid-May.

Between March and May, retail store sales plummeted 78.4 per cent pushing global sales down $131.1 million on the comparable period in 2019.

While stores were closed, online sales surged, rising 70 per cent to $123.3 million in the June-half and contributing 25.5 per cent of Premier sales, up from 12.3 per cent a year ago.

This lifted online sales for the year by 48.8 per cent to $220.4 million or 25.5 per cent of total sales.

Premier Retail delivered record underlying earnings of $187.2 million, up 11.9 per cent on the previous year with total sales down 4.3 per cent to $1.22 billion.

Sleepwear designer brand Peter Alexander delivered record sales, up 16.3 per cent to $288.2 million, while stationery chain Smiggle’s online channel delivered record sales, up 57 per cent in the six months ended July 25 representing 25 per cent of all sales in the brand.

The operating results for the year generated net cash of $339.3 million during the year, up $216.0 million on 2019.

“Our record result during this global health crisis is no accident,” Premier Retail chief executive Mark McInnes said.

“It is 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.”

McInnes said the group would shut down any unprofitable bricks-and-mortar stores across the business in the future, with 70 per cent, or 350, of its Australasian stores in ''holdover'' or with leases expiring in before the end of the year.

Premier declared a final dividend of 36c a share, down 1c from the previous year, totalling about $57 million.

Lew, who owns 42.43 per cent of the company, this be entitled to a payment of $24.25 million when dividends are paid next year.