The economic shock of the Brexit vote did not dent British children’s appetite for Smiggle’s colourful pencil cases and notepads, retail veteran Solomon Lew says.
Mr Lew’s retail group Premier Investments, which owns Smiggle and a string of apparel chains, launched a review of its burgeoning British stores after the UK voted to leave the European Union in June.
The review found Smiggle’s post-Brexit sales were equal to or better than its sales before the vote, Mr Lew said.
“We never missed a beat with sales. They have been really strong,” the Premier Investments chairman said.
Chief executive Mark McInnes said Smiggle’s expansion plans are still on track despite taking a breather during the review.
“Despite all the noise from Brexit, given the size of the market and our strong market position, we remain on track for 200 stores and $200 million of annual sales by calendar 2019,” he said.
Smiggle opened 52 new stores in 2015/16, including 40 in the UK and seven in Australia. It also has stores in New Zealand and across Asia.
Premier plans to have between 85 and 90 Smiggle stores trading in the UK before Christmas, and ten stores in Malaysia and Hong Kong.
Smiggle’s rapid growth and the group’s other core brand, pyjama retailer Peter Alexander, were the main drivers of Premier’s 18 per cent profit growth to $104 million in 2015/16.
The group of seven retailers, including dotti, Jacqui E, Jay Jays, Just Jeans and Portmans, achieved total sales growth of nearly 11 per cent to a record $1.05 billion in the year to July 30.
Smiggle’s sales soared 42 per cent and Peter Alexander’s sales increased by 20 per cent, and their combined revenue now makes up more than a third of Premier’s total sales.
Jay Jays was the only brand to suffer a fall in sales, dropping one per cent.
The group said warm autumn weather and a long federal election campaign slowed sales growth in the second half of its fiscal year.
Premier Investments shares fell, as its net profit missed market expectations of between $105 million to $107 million, analysts said.
“They also haven’t updated the market on like-for-like sales for 2017, which makes the market nervous,” IG market strategist Evan Lucas said.
Premier shares dropped 33 cents, or two per cent, to $16.17.
SMIGGLE EXPANSION DRIVES PREMIER’S GROWTH
* Net profit up 18pct to $103.9m
* Total revenue up 10pct to $1.059b
* Fully franked final dividend up four cents to 25 cents.