Premier Investments has reported a 49.12 per cent drop in net profits for the 2011 financial year, citing a "very challenging retail environment".
Net profit after tax (NPAT) for the parent company of The Just Group was $40.517 million for the year to July 31, a 49.12 per cent fall on the previous corresponding period ($79.633).
Underlying profit before tax, however, was $73.3 million, in line with recent guidance, with total revenue, also up slightly (0.2 per cent) to $906 million.
Sales for Premier Retail, comprising The Just Group, were also up 1.1 percent to $866 million from 2010, with underlying earnings before interest and tax (EBIT) at $65.3 million, also comparable with recent guidance.
Addressing the fall in NPAT, Premier chairman Solomon Lew said the combination of the tough retail landscape and an $11 million one-off cost following its retail strategic review, influenced FY11 results.
“The result reflects the very challenging retail environment and costs of the recently announced strategic review,” he said.
“During the year the Board moved quickly to appoint Mark McInnes as CEO of Premier Retail [and] under his leadership, the retail business has implemented a range of initiatives identified from a strategic review of its diverse portfolio of strong brands and is currently working to rejuvenate and reinvigorate the core apparel brands and grow both Peter Alexander and Smiggle.”
In a statement released to the Australian Securities Exchange this morning, Premier also revealed the very challenging retail environment was characterised by very low levels of consumer confidence, weak clothing and apparel sales, consequent extensive industry discounting and the natural disasters in Queensland, Victoria and New Zealand.
Within its fashion stable, the group reported that Jay Jays and Dotti were most affected, while the Portmans turnaround “has progressed well”. Sleepwear label Peter Alexander and its stationary brand Smiggle delivered the strongest performance of the group’s brands and Premier said it will continue to invest in their growth.
The strategic review of Premier’s retail assets and opportunities, announced in July this year, is also progressing to plan, according to chief executive Premier Retail, Mark McInnes.
“The implementation of the six point plan is on track to deliver the forecast benefits under a strengthened and re-invigorated senior management team,” he said.
The review highlighted the unique strengths within the Just Group’s platform and a broad range of opportunities for Premier Retail, including six key EBIT performance initiatives for The Just Group:
-
Rejuvenate and reinvigorate all five core apparel brands
-
Organisation-wide cost efficiency program
-
Two phase gross margin expansion program
-
Expand and grow the internet business
-
Grow Peter Alexander significantly
-
Grow Smiggle significantly
Based on the successful implementation to date of the strategic initiatives, and subject to the macro environment stabilising and Christmas trading, the company has confirmed its guidance for the 2012 financial year, estimating that EBIT for Premier Retail will come in at around $80million to $95 million.
“The Macro economic environment and consumer confidence has continued to deteriorate in August. As a result, trading for the first six weeks of the season has been very challenging,” McInnes said.
“We are focused on the reinvigoration of our product and brands and improving gross margin through better sourcing. Given the macro environment we have reacted quickly with an accelerated cost reduction program. Our inventory is clean in all brands, and all our new Peter Alexander and Smiggle stores are on track to open pre Christmas”.