Solomon Lew’s Premier Investments has offshore expansion on the agenda for its pyjama brand Peter Alexander.
But growth, at least in the short term, may still be found in Australia, according to market analysts.
Citi Australia has predicted the initial opportunity for international sales growth is likely to be limited, given less than 5% of total web traffic for peteralexander.com.au originates internationally.
Peter Alexander is currently finalising a cross border ecommerce partnership, which will expand the sleepwear brand internationally across 35 countries.
The brand currently has 126 stores in its network between Australia and New Zealand, with local network expansion opportunities already identified.
“We expect this rollout to occur organically over the next three years, subject to negotiations with landlords,” Citi analysts confirmed in a note to clients.
“We think most of the growth for Peter Alexander will still be concentrated around the 20-30 domestic opportunities, which represents at least 15% of the existing store base.
“In our view, the offshore online expansion will, at least initially, provide limited growth given less than 5% of web traffic for peteralexander.com.au originated from offshore.
“However, we do view this as a low-risk way of entering each offshore market and opens up optionality for the brand.”
Premier Investments Limited's net profit after tax was up 6.5% to $174.3 million in the half year to January 28.
Peter Alexander has doubled its sales over the past four years. In the latest half year, the brand delivered a 15.1% lift in sales to $261.7 million.
While Citi analysts cited "healthy sales momentum" in its trading update for the first six weeks of the second half, the outlook remained cautious amid increased strain on household budgets.
At Morgan Stanley, Premier Investments was listed as the “most preferred” pick in its small cap retail coverage.
Analysts said the results beat consensus market estimates and support a continued track record of beating expectations, capital management and global expansion.
“The most interesting takeaway was growth is back on the agenda via PA (Peter Alexander) offshore expansion and store roll-out resuming,” analysts wrote in a note to clients.