Investor analysts at Macquarie Bank think Premier Investments could outperform over the next twelve months on share price value despite ongoing challenges with its Smiggle business and concerns over Peter Alexander’s entry into the United Kingdom over the last year.
Run by retail billionaire Solomon Lew, Premier has faced a turbulent 2025. After selling off its Just Group brands to Myer – namely Just Jeans, Jay Jays, Jacqui E, Dotti and Portmans – the group was left with a wayward accessories business and a sleepwear brand that doesn’t seem to be doing as well in the UK as it is in Australia and New Zealand.
In FY25, Peter Alexander's sales hit $548 million, up 7.7 per cent year-on-year and predominately boosted by its Australian and New Zealand Market. Smiggle delivered global sales of $264.2 million in FY25, down by 10.7 per cent.
Smiggle’s challenges follow the unceremonious sacking of its managing director, Josh Cheston, in late 2024 on what Lew has alleged to be various issues. These allegations included being intoxicated during work, gambling at work, bullying and sexual harassment. Cheston swiftly rejected these claims, with a spokesperson for Cheston describing Lew’s allegations as a “rant” that was “simply untrue”.
An investigation is apparently still underway, with Smiggle yet to name a new permanent boss. Cheston is now the global CEO of Lovisa.
All of these headwinds have culminated in a few investment banks slashing their outlook for Premier’s stock (ASX:PMV) in December last year after the group’s AGM, including Macquarie which dropped its rating to Neutral.
But Macquarie has changed its tune a little, reverting its rating to Buy and arguing the group’s share price will outperform in the next twelve months, albeit from a lower base than a year ago. PMV’s share price is currently sitting at $13.43 (time of writing, 11:54am, 28/01), up from a recent low of $12.76. This time last year, the share price peaked at $29.90.
According to Macquarie, it considers that around 71 per cent of PMV's equity value is now 'low-risk', with the remaining 29 per cent comprising PMV Retail (Peter Alexander and Smiggle).
“Within PMV Retail, our High Frequency Consumer Data, foot traffic data & Google indicators all have positive reads for Peter Alexander sales in Australia,” Macquarie analysts told investors in a note. “We show in this note that an additional $8.35-$9.89 (+65%-78%) of value per share could be realised from PA trading in-line with its ASX-listed apparel retailer peers with typically lower EBIT margins.”
The analysts added that potential concerns around like-for-like sales being skewed by refurbishments, and risks to the UK entry – which Premier has confirmed cost them under $11 million – are priced into Macquarie’s assessment.
As for Smiggle, the analysts think trading weakness and management churn is priced in, too. Excluding the Smiggle subsidiary, they pointed out that PMV Retail could still trade at 3.4 times earnings before interest and tax (EBIT) over the next twelve months.
Interestingly, much of the juice driving PMV’s stock comes from its other investments, including over the Breville Group – a whitegoods retailer that Premier holds a significant stake in. According to Macquarie analysts, this stake now forms 56 per cent of PMV’s market cap, which is an historical high.
Breville (BRG) also remains a Macquarie ‘top pick’. “With an investment-trust discount being applied to PMV, in our view, we also question whether further structural separation of its BRG stake, as well as its non-synergistic brands (PA, Smiggle), would unlock greater shareholder value,” Macquarie analysts added.
Looking ahead to PMV’s upcoming first half disclosures, Macquarie analysts are hoping for more visibility over Peter Alexander’s earnings, particularly in the United Kingdom, and a turnaround in the Smiggle business. They are also crossing fingers for a strong first half result from Brevilles, set to be revealed on February 12.