Sleepwear label Peter Alexander has emerged as the core earnings driver behind Premier Investments, marking a significant shift in the portfolio strategy of chairman Solomon Lew.
The brand's annual sales have more than doubled since FY19 and are continuing to grow into FY26 despite a softer retail backdrop. Annual sales are on track to deliver another record in FY26, following strong growth in the first half. By comparison, Peter Alexander's sister subsidiary Smiggle peaked at $319 million in FY23 before declining to $264 million by FY25.
In the first half of FY26, both Peter Alexander and Smiggle recorded combined total sales of $452.8 million, down 0.5 per cent on 1H25, with earnings before interest and tax (EBIT) hitting $119.3 million, down from $129.4 million in the same period last year.
The boom for the sleepwear brand has been building for some time. Founded in 1987 as a mail-order pyjama business, Peter Alexander has evolved into a global retail network of more than 130 stores across Australia and New Zealand, with a recent push into the UK market adding a new growth lever.
Premier confirmed it is now looking at possible wholesale distribution contracts for Peter Alexander. This is similar to Smiggle, which operates distribution contracts in the Middle East and Indonesia.
The sleepwear brand is also scaling a loyalty program, which is on track to hit 1 million members by FY26 end, and has identified 15 new spaces to open stores in the near future.
This comes as the global sleepwear market is set to hit a value of US$25 billion by 2034, according to research firm IMARC Group, which represents a compound annual growth rate of 5.89 per cent. That is more than $10 billion on top of the US$14.7 billion recorded in 2025.
The research firm claims this growth is coming from general lifts in disposable income levels, enabling consumers to opt for higher-quality and specialised sleepwear options. Peter Alexander sits in the accessible pricing category, with Premier calling it a “gifting destination”. Prices generally sit in the double digits to low triple digits.
IMARC added that the introduction of seasonal and festival sales, such as Black Friday, Boxing Day and the like, creates peak purchasing periods that significantly boost revenue among sleepwear brands.
“Besides this, the ongoing technological innovations that are continually refining sleepwear quality, offering features like thermal comfort and fire resistance, are contributing to the market growth,” IMARC noted. “Additionally, the increasing collaborations with celebrities and other popular brands, adding a unique selling point that entices new consumers, is positively influencing the market growth.”
In Australia, the market is expected to grow at a CAGR of 8.7 per cent.
But, despite the continued momentum in sales growth for Peter Alexander in FY26 to date – with first half sales up 4.9 per cent to $312.3 million and early second half sales “exceeding” the first half sales growth trend – analysts at Macquarie estimate the sleepwear brand is valued at 3.3 times its operating earnings. The analysts said this marks a 71 per cent discount to its apparel peer average of 11.4 times, “despite industry-leading margins”.
Macquarie also pointed out that the brand’s sales in the United Kingdom are growing, and that Premier’s pivot to outlets should reduce the UK cost base.
“UK sales were up 58 per cent YoY to $3.8 million, albeit UK marketing investment subsequently resulted in a ~$3.8 million EBIT loss for the UK business,” Macquarie reported. “Management noted they do not expect to open any more stores until it becomes more profitable and brand awareness is greater.”
All this growth at Peter Alexander is holding up group profitability as Smiggle undergoes a strategic reset. Georgia Chewing, who was appointed as the brand’s new managing director in the first half, is leading the move following a review across product, stores and distribution.
Premier told shareholders that the review acknowledged Smiggle’s strong fundamentals: "notably strong brand recognition with its customers; a broad international multi-channel footprint with proprietary stores, wholesale partners and online channels across over 20 countries; and a brand that has shown proven resilience through various cycles.
“The review identified the opportunity for Smiggle to re-align its brand identity to its original core customer age group of 6-12 year olds, as the brand’s offering gradually skewed towards a younger demographic over recent years.”
Analysts at Morgan Stanley, another broker, think the appointment of a permanent Smiggle MD adds greater certainty around the scope and timing of the strategic reset.
“The product refresh, alongside improved sourcing, provides the right building blocks to rebuild momentum, in our view. But, execution risk remains, given high price differential vs discount department stores and new online players,” Morgan Stanley told investors in a note.
Overall, Morgan Stanley analysts have factored conservatism into its FY26 guidance, with the broker calling the valuation of the business still quite compelling.
“We see minimal impacts to 2H from fuel and freight disruptions, noting the seasonal buying structure means 2H products are already either produced or in transit, though higher domestic freight may drive marginal cost pressure,” Morgan Stanley noted.
The broker concluded that a softening consumer outlook is underpinning its more conservative assumptions heading into the second half, with valuation settings for the retail division revised lower to reflect increased risk.
As a result, its 12-month target share price has been trimmed down by 12 per cent to $16.90. This is still well-above Premier’s current share price of $12.52 (April 1, 9am).
Morgan Stanley analysts added that solid underlying performance at Peter Alexander, alongside early signs of a turnaround at Smiggle, does not justify the current discounted valuation implied for the retail business.
Macquarie analysts concur with that assessment, claiming Premier could outperform in the next 12 months.