The Premier Investments Limited (ASX: PMV) share price will be on watch today after revealing the strong sales have continued.
Trading update
Premier Retail revealed that total global sales for the first 18 weeks of the second half of FY21 (to 5 June 2021) were up 70% on the comparable period of the second half of FY20 and up 15.8% compared to the comparable 18 weeks of the second half of FY19.
The company said its trading during the all-important Easter school holiday trading period was particularly strong.
It also delivered a record Mother’s Day and May result as Premier Retail successfully cycled the re-opening of all of its Australia and New Zealand stores which were closed due to COVID-19 lockdowns.
Premier said that the current trading environment remains extremely volatile given the ongoing COVID-19 impact on global operations. With all the uncertainty, Premier Retail is expecting EBIT (EBIT explained) for the 53 weeks in FY21 ending 31 July 2021 to be in the range of $340 million to $360 million.
The above range would represent growth of between 82% to 92% on the underlying EBIT of $187.2 million in FY21 (52 weeks). It would also represent growth of 103% to 115% on the underlying FY19 EBIT of $167.3 million (52 weeks).
What’s driving this strong result?
Premier said there were a few core reasons driving the strong profit growth. There’s strong customer demand for the winter product ranges across all brands.
Next, there is strong online sales growth and highly profitable online performance.
There has been exceptional gross margin expansion with the FY21 second half season to date up more than 380 basis points (3.80%).
Finally, Premier said there has been a strong cost control culture. It’s continuing to reach an agreement with landlords that appropriately rebase the group’s rent expense.
Executive Director and Premier Retail CEO Mr Mark McInnes said: “The Group has successfully enabled customers to shop seamlessly either online or in-store during the COVID-19 health crisis. This has been achieved through the long-term strategic investments made in our online capability combined with our ability to reach mutual agreements with landlords to appropriately rebase rents.”
Summary thoughts on Premier Investments and the share price
Premier Investments is a quality retailer on the ASX. It’s growing strongly. The fact that EBIT is going to double compared to FY19 is impressive. I’m not sure if it’s worth buying now or not. This type of growth isn’t going to continue forever. But it does justify a higher share price.
Global demand is recovering nicely, so the next six to 12 months could be good for its global operations. It’s certainly one of the ASX dividend shares worth putting on the watchlist.
