Now the Melbourne billionaire is doubling down on his Premier Investments brands.
Premier owns some of Australia’s most popular retail brands: clothing outlets Just Jeans, Jay Jays, Dotti, Portmans and Jacqui E, along with Peter Alexander and Smiggle. It operates a portfolio of 1100 brick-and-mortar stores, one of them the largest in Australia, as well as more than a dozen e-commerce sites.
Premier will invest its cash in its powerhouse categories, pyjamas and children’s stationery.
Premier plans to open 20 to 30 new Peter Alexander stores in the medium-term to add to the 140 it already has. It will boost online sales offshore by partnering with a global cross-border e-commerce provider, making it easier for shoppers in 36 countries to order online.
It plans to open 30 or more new Smiggle stores in existing regions in the short-term, expanding the brand’s footprint by 10 to 15 per cent.
Both brands are coming off strong results reported last week.
Peter Alexander sales rose 15 per cent to A$262 million in the January half, and first-half sales have doubled in four years, benefiting from the pandemic, when a lot more people lolled around in their pyjamas.
Conversely, Smiggle sales suffered during the pandemic, as lockdowns meant kids didn’t need cutesy stationery to take to school. But sales have since returned to pre-Covid levels after a 30 per cent jump in the six months to January, made all the more impressive by the fact that the chain closed 51 stores, or 14 per cent of its network, during the pandemic.
Lew will use the opportunity presented by a global retail slowdown to drive better deals from manufacturers and freight companies, particularly as Northern Hemisphere retailers reduce their orders.
And he’ll do something similar with landlords, negotiating lower rents at a time when other shopping chains are closing some of their stores.
Lew demonstrated what a tough negotiator he was at the height of the Covid pandemic in 2020. He shuttered Premier Investments’ 1250 shops and refused to pay rent.
Premier’s rent costs are now down to 11.6 per cent of retail sales, compared with 15.9 at the height of the pandemic. Lew can probably negotiate this lower still.
However, it seems investors don’t share Lew’s optimism about Premier’s prospects in the next few years.
Shares are down 10 per cent on last year, despite the strong profits and a bumper dividend.
All of Premier’s brands are in the discretionary spend category. Shoppers can either do without them or buy cheaper alternatives from Kmart or Target if money is short, and this is what investors are focusing on.
But you’d be brave to bet against Lew and Premier’s CEO Richard Murray – the dream team of retail.
Murray joined the company in 2021 after driving brick-and-mortar electronics retailer JB Hi-Fi to record profits, despite the trend towards buying electronics online. The company’s market capitalisation grew from A$1.5 billion in 2014 to A$6b when he left, whilst paying over A$1b in dividends to shareholders over that time.
Lew’s experience in retail stretches back to his childhood and the death of his father, which saw the teenage Solomon supplying dresses from Melbourne’s Flinders Lane rag trade precinct to the Myer emporium.
He is obsessed with retail. It’s said that when he takes someone’s jacket to hang it up, he checks the label – not because he’s a snob, but because he’s interested in what everyone’s wearing and buying.
Premier shareholders who have come along for the ride with the 77-year-old businessman have done well.
Total shareholder returns including dividends for Premier are 1168.7 per cent since August 2008, when it took control of Just Group, which owned Just Jeans and Peter Alexander.
After reporting strong first-half results last week, Premier looks as if it’s continuing to trade strongly. The first six weeks of its financial second half – taking us to mid-March – are up 7.7 per cent on last year.
If anyone can pull off the feat of expanding a retail group and increasing its profits during a spending downturn, it’s Murray and Lew.
