Just Jeans operator set to close stores

File photo

Premier Investments Ltd., the ASX-listed operator of Just Jeans, Jay Jays and Jacqui E brand stores, is to close 50 loss-making stores in Australia and New Zealand at the end of their leases.

The Melbourne-based company hasn't identified where the cuts will come, though the New Zealand business will be in view after Premier Investments said it expects sales on this side of the Tasman to fall 1.5% in the six months ended July 31, lagging behind forecast growth in Australia of 3.6% over the same period.

The closures, which will see staff laid off, will cost the business between A$14 million and A$16 million.

Once that's complete, Premier Investments will switch its focus to the Peter Alexander and Smiggle brands in a bid to gain some traction in a tepid retail environment.

In the next three years, it plans to open 15 to 30 Peter Alexander stores in Australia, and 30 to 50 Smiggle stores on both sides of the Tasman. It is also looking at between 12 and 20 more Smiggle stores in Singapore, with a view to expanding deeper into Asia.

"Margin has remained under pressure as industry wide discounting has increased," chief executive Mark McInnes said in a statement. "We have moved swiftly to better align our cost base for FY12, as well as ensure our excess winter inventory has been priced to clear over the last two weeks of this month."

Consumers have been starting to show some appetite to spend after shying away from the stores since the country fell into its deepest recession in almost two decades in 2008, resulting in a seemingly endless sales season as retailers try to bring in customers.

Premier Events expects to report full-year pre-tax earnings of between A$64 million and A$66 million, rising to a range of between A$80 million and A$95 million in the 2012 financial year.

The ASX-listed shares fell 2.6% to A$5.17 in trading today, and have dropped 16% this year.