Premier Retail Sales Steady at $860 Million; EBIT Falls to $165 Million
Premier Investments reveals a steady sales performance despite ongoing cost-of-living challenges, while preparing for a strategic merger with Myer.
- Premier Retail anticipates global sales between $855 million and $865 million for 1H25
- Underlying EBIT expected to range from $160 million to $165 million, down from $204.9 million in 1H24
- Apparel Brands segment sales forecasted at $405 million to $412 million with EBIT decline of $16 million to $20 million
- Retail conditions remain tough due to consumer cost-of-living pressures
- Shareholders to vote on Apparel Brands and Myer combination in January 2025
Challenging Retail Landscape
Premier Investments Limited has released an unaudited trading update for its Premier Retail segment covering the first half of the 2025 financial year (1H25). The company reports that retail conditions have remained challenging across its global markets, with consumers increasingly focused on value amid ongoing cost-of-living pressures. Despite these headwinds, Premier Retail expects total global sales to hold steady in the range of $855 million to $865 million, broadly flat compared to the same period last year.
Underlying earnings before interest and tax (EBIT), excluding accounting standard AASB16 impacts, are projected between $160 million and $165 million. This represents a notable decline from the $204.9 million EBIT recorded in 1H24, reflecting margin pressures and a cautious consumer environment.
Apparel Brands Segment Under Pressure
The company’s Apparel Brands business, which includes Just Jeans, Jay Jays, Portmans, Dotti, and Jacqui E, is expected to generate global sales between $405 million and $412 million. However, EBIT for this segment is forecasted to fall by $16 million to $20 million compared to the prior corresponding period, landing between $31 million and $35 million. Premier notes that gross margins for Apparel Brands are anticipated to remain broadly flat, suggesting that the EBIT decline is driven primarily by lower sales volumes or increased operating costs.
Premier also highlights that inventory levels at the end of 1H25 are expected to be clean and in line or below those of 1H24, indicating effective stock management despite the challenging trading environment.
Strategic Move: Combining Apparel Brands with Myer
In a significant strategic development, Premier is moving forward with a proposed combination of its Apparel Brands business with Myer Holdings Limited. A shareholder meeting is scheduled for 23 January 2025 to consider and approve the necessary resolutions. Premier’s board unanimously recommends shareholders vote in favor of the proposal, with directors intending to support the transaction with their own shares.
This combination aims to create a more competitive and resilient retail entity, potentially unlocking synergies and enhancing market positioning amid a tough retail backdrop. The update excludes any financial impact from this transaction, which remains subject to shareholder approval and regulatory processes.
Looking Ahead
Premier’s trading update cautions that the projections remain unaudited and subject to change as the remainder of the half unfolds, including the conclusion of Back-to-School and January sales periods. Additionally, the company excludes results from its Peter Alexander UK launch and costs related to the new Just Shop loyalty program from the EBIT guidance, signaling areas to watch in future updates.
Overall, Premier’s performance reflects the broader challenges facing apparel retailers in a cost-conscious consumer environment, while the strategic combination with Myer signals a proactive approach to navigating these headwinds.
Bottom Line?
As Premier navigates flat sales and earnings pressure, the upcoming Myer merger could redefine its retail trajectory.
Questions in the middle?
- How will the combination with Myer impact Premier’s long-term profitability and market share?
- What are the risks and potential costs associated with the Just Shop loyalty program launch?
- How might ongoing cost-of-living pressures continue to affect consumer spending in Premier’s key markets?
