Small Caps | 2:37 PM
Following Premier Investments largely in-line interim results, analysts point to ongoing momentum for Peter Alexander and potential upside from a Smiggle strategy reset.
- Premier Investments’ interim meets guidance
- Trading update shows stronger Peter Alexander momentum
- Ongoing Smiggle weakness prompts a strategic reset
- Analysts observe the shares are trading at a sizeable discount
By Mark Woodruff
Retail investment company Premier Investments ((PMV)) delivered first-half results broadly in line with both management guidance and consensus forecasts.
While revenue missed market expectations by -3%, this was offset by better-than-expected cost control and a higher-than-expected interim dividend.
A trading update for the first seven weeks of the second half also highlighted strong momentum in core sleepwear brand Peter Alexander.
Bell Potter identifies the result's key positive as a strategic reset at children’s school supplies retailer Smiggle.
This is aimed at improving performance through product repositioning, faster speed to market and brand elevation initiatives underway in the second half.
Following the organisational refresh, Smiggle is expected to return to positive growth by the end of the first half of FY27, breaking the trend of declines in place since the first half of FY24.
The company also announced it is exploring global wholesale partnerships for Peter Alexander as the next phase of growth.
Premier operates through its Retail and Investment segments.
Retail comprises specialty chains including Peter Alexander and Smiggle alongside mature brands such as Portmans.
The Investment segment includes property holdings and investments in securities for both capital gains and income, including dividends, rent and interest.
Key assets within this segment include equity stakes in Breville Group ((BRG)) and Myer ((MYR)), as well as properties at St Kilda Road (global head office) and its Australian distribution centre.
The outlook for Peter Alexander and Smiggle
Second-half trading was strong for Peter Alexander but weaker for Smiggle, implying to Macquarie a greater contribution from Peter Alexander and an improved overall earnings mix for the group.
Peter Alexander’s first seven weeks exceeded first half sales growth, highlights Morgan Stanley.
Smiggle’s second half is expected to remain a transition period as inventory is reset ahead of new product launches in the first half of FY27, with a return to growth targeted in line with consensus.
Macquarie views strong second half commentary for Peter Alexander as encouraging, particularly against a more challenging A&NZ macroeconomic backdrop.
Certainly, Morgan Stanley argues the strong Peter Alexander performance and a potential Smiggle turnaround do not warrant the current implied trough valuation multiples for the retail business.
This broker believes a strategic reset at Smiggle, supported by the appointment of a permanent Managing Director, provides greater confidence in a potential recovery.
Georgia Chewing has been appointed Managing Director of Smiggle, having previously served as interim COO, while John Bryce will return to his role as CFO after acting as interim CEO.
It’s felt a product refresh and improved sourcing provide a solid foundation to rebuild momentum, though execution risk remains given the price gap to discount department stores and emerging online competitors.
The gross margin, including Peter Alexander UK losses, was 66.6% compared to 67.7% a year ago, slightly above consensus of 66.5%, according to UBS.
Management guided to FY26 pre-AASB16 earnings (EBIT) of $183m, in line with the consensus estimate.
Premier, a brief history
Founded in 1987 and controlled by Solomon Lew, Premier initially focused on acquiring strategic retail stakes.
Over time, management built a portfolio of apparel brands including Just Jeans, Portmans and Dotti, alongside wholly owned growth concepts Smiggle and Peter Alexander.
Around 2013-2014 the group expanded internationally, primarily through Smiggle’s global rollout. Rapid expansion followed across the UK, Europe and Asia through the mid-to-late 2010s.
Peter Alexander’s international expansion has been more limited and recent, having historically been A&NZ-focused, with offshore growth, such as entry into the UK, only commencing from around 2022.
In 2025, Premier completed a major transformation, selling its Apparel Brands to Myer and repositioning as a higher-margin, capital-light business focused on Smiggle, Peter Alexander and investments such as its 25% stake in Breville Group.
Shares in Premier have lost around one-third of their value since the AGM in early December last year to be trading around $12.50 today. Over the last year, shares have traded between a high of $22.92 and the recent $11.20 low.
At the AGM, management guided to 1H FY26 underlying earnings of $120m, below consensus forecasts of $133m, with Smiggle, particularly the UK, driving the shortfall.
Peter Alexander is benefiting from an expanding addressable market, while Smiggle has struggled to grow its addressable audience (TAM) due to a narrow age range and weaker product innovation.
Additionally, Smiggle’s core customers of young families are facing rising cost-of-living pressures, further weighing on demand.
Management noted at the AGM “discretionary spending remains under pressure with consumers cautious due to ongoing cost-of-living impacts”.
The latest interim results
The interim net profit declined by around -13% to $101.6m, largely reflecting weakness in Smiggle.
Revenue and earnings for the Premier Retail segment (the sum of Peter Alexander and Smiggle) were $452.8m and $119.3m, respectively.
Peter Alexander sales rose 4.9% on the prior year to $312.3m, a near doubling of sales over the past six years.
Market share expanded across all product categories, notes Macquarie, with growth further supported by four new store openings in Australia and four store relocations or expansions.
In contrast, Smiggle sales declined -10.7% to $140.5m, reflecting ongoing exposure to consumers facing cost-of-living pressures across global markets.
The brand reduced its store footprint by around -8.7% to 282 stores in 1H26, with the majority of closures in the UK.
While this weighed on earnings in the period, Macquarie believes it should support improved operational efficiency going forward.
Re-invigorating Smiggle
Management has decided to initiate a brand repositioning strategy for Smiggle including new product categories, store format changes and a renewed focus on its core six-to-twelve-year-old demographic.
Jarden suggests the around -23% revenue decline over FY24–F26 reflects both rising competition and the absence of a CEO for more than 18 months.
With a new CEO announced and a renewed focus on product, it’s felt management can stabilise the business, though Citi suggests the situation at Smiggle may worsen before improving.
The appointment of a permanent MD and initiatives to reinvigorate the brand through repositioning toward the core customer and expanding boys’ ranges carries execution risk, cautions this broker, particularly amid rising competition from international entrants such as Pop Mart and Miniso.
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