Macquarie analysts expect Solomon Lew’s eCommerce operations to benefit from a new demand: loungewear.
Lew’s Premier Investments has a number of brands which could cater to this demand, including hero apparel brand Peter Alexander.
Online sales represented around 13% of total sales in the first half of 2020, according to a report issued by Macquarie Wealth Investment.
“We assume online sales remain moderately healthy over the shutdown period, with categories such as loungewear poised to be in high demand.
“This is consistent with recent feedback from both listed and unlisted competitors.”
Analysts reported a number of offsets to the company, including wage subsidies such as JobKeeper payments in Australia as well as no rental overheads.
Lew famously proclaimed his company would not pay rent during the shutdown period.
Analysts considered the absence of rents - at $19.4 million a month in 1H20 - over the three-month shutdown and wages subsidies in Australia, NZ and the UK to provide relief this year.
“We continue to acknowledge that the longer-term implications for larger retail groups failing to meet current rental obligations remain unclear.”
Working capital implications from reduced stock orders, lowered accrued expenses and a difficulty in clearing inventory will also continue to be incorporated into forecasts.
Earnings per share for FY20 are forecast to fall 33.6%, reflecting subsidies and the impact of most online stores remaining open failing to offset one additional month of shutdown of physical stores.