Investor analysts remain relatively optimistic over Solomon Lew’s Peter Alexander and Smiggle brands, with two out of four investment bank notes maintaining a buy rating on Premier Investments (ASX:PMV) stock and another thinking the stock is overweight.
But one, Petra Capital, is cautiously optimistic, maintaining a hold position, despite projecting a $2 lift in Premier’s share price over the next 12 months to $21.25. PMV’s current price is $19.60 (as of writing, 11:20am, September 30).
Petra Capital analysts are not happy with Smiggle’s performance especially, where sales fell by 10.7 per cent in FY25, and has also put a dampener on Peter Alexander’s United Kingdom push.
The UK entry cost Premier $10.9 million in investment, including $6.3 million in the first half of FY25 (with upfront investment) and $4.6 million in the second half. Petra analysts are assuming a similar seven-figure loss in FY26 for the sleepwear brand in the UK market.
This is despite Peter Alexander’s Australia and New Zealand (AU/NZ) market maintaining its growth, with FY25 sales up 7.7 per cent. This includes a strengthening 9.2 per cent sales growth in the second half, albeit buoyed by new and expanded stores according to Petra Capital.
This momentum continued in the first six weeks of FY26, up 9.2 per cent.
For Smiggle, sales had improved in the second half of FY25, down just 4.7 per cent. However, Petra analysts noted this is against weaker comps. Sales in the first six weeks of FY26 were down 4 per cent, impacted by a shipping line delay.
“Macro (cost-of-living pressures), product offer and increased competition have challenged Smiggle,” Petra Capital analysts noted. “In the UK, PMV closed 10 loss-making stores plus 5-10 more planned in FY26, with online a larger channel in that market. PMV flagged a long runway is in place for future product collaborations.”
The other challenge for Premier overall is a material increase in cost of doing business (CODB) combined with increased clearance in the second half, Petra Capital added. This led to a steep 557 basis point fall in Premier’s EBIT margin to 24.2 per cent.
Premier’s CODB was driven by double-digit growths in rent and wage expenses, up 14.2 per cent and 12.7 per cent respectively.
“FY25 GM% -142bps vs 1H25 -59bps, implying material contraction in 2H25 and was the key reason for the Retail EBIT miss vs PCe. Increased clearance amidst a highly promotional backdrop to maintain a clean inventory position,” Petra Capital reported.
But analysts at UBS, Bell Potter and Morgan Stanley are a bit more optimistic on PMV stock. UBS, which has a $24.00 12-month target price for PMV shares, noted the strong core AU/NZ Peter Alexander business and “the extent BRG [Breville Group] is underappreciated within its evaluation."
PMV has a 25 per cent share in the kitchen appliance business, which UBS thinks makes the risk/reward attractive, despite the challenged Smiggle business and start-up losses in Peter Alexander’s UK push.
Diving deeper, UBS analysts noted the 7.7 per cent lift in the sleepwear brand’s sales (excluding its UK push), is driven by it growing into its larger category (plus-sizing, gifting), customer (kids, mens) and purpose (gifting) total addressable market (TAM). This was executed across more new and relocated/expanded stores in AU/NZ, up 6 and 9 respectively.
“Expansion of the average store size from smaller (~100-150sqm) to larger (+200sqm) stores is a multi-year growth driver, supported by focused execution,” UBS reported.
On the flipside, Smiggle is exposed to cost of living pressures which weigh on its core customer (young families), as well as sub-optimal product execution, according to UBS. "Given the more narrow age TAM for Smiggle (~4-11 y.o. customer in ANZ) improved execution is vital, hence the patience in finding the right replacement CEO.”
Premier sacked John Cheston last year from the lead role of Smiggle over “serious misconduct”, with allegations recently aired in a press conference by Solomon Lew.
Meanwhile, Morgan Stanley and Bell Potter are extra exuberant over PMV stock, with 12 month target prices of $26.00 and $26.50 respectively.
Bell Potter analysts have adjusted their revenue estimates in line with PMV’s recent trading update as they “factor in some conservatism for the comps cadence" through the first half, which they say are slightly more challenging through to the second quarter.
While they see some optimism in the Smiggle brand ahead of the key sales period in AU/NZ following positive like-for-like trends in the UK's back-to-school sale at the start of the first half of FY26, they expected sales to still remain negative for the brand, albeit lower than recent results, with a return to positive growth in the second half.
Bell Potter also expects Peter Alexander's revenue growth to remain similar to recent results, driven by store upsizing and growth in categories.
Echoing similar reasons at Bell Potter, Morgan Stanley analysts set its $26.00 share price target in line with its sum-of-the-parts valuation, for which around 70 per cent comes from the operational business and 30 per cent from investments and cash. Alongside the BRG shareholding by PMV, the group also had $333.3 million in cash reserves at the end of FY25.
“We apply a 12x multiple for Smiggle and a 23x multiple for PA,” Morgan Stanley noted. “We maintain our OW rating given: i) ample growth runway in PA from store size expansion, network growth, and international optionality, ii) a turnaround opportunity in Smiggle, and iii) attractive valuation for the retail business at ~13x (MSe) when adjusting for investments/cash reserve.”