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Smiggle parent Premier Investments feeling the impact of pandemic

Premier Investments has weathered a string of global crises, including Brexit, Hong Kong protests and Australia’s bushfires to post record sales and earnings in the first half of the financial year – but now it says the coronavirus pandemic is impacting trade across every brand in its portfolio.

On Friday, the owner of major national and international retail brands, including Smiggle, Peter Alexander, Just Jeans, Portmans, Dotti, Jacqui E, Jay Jays and Breville, reported a 7.6-per-cent increase in first-half sales year on year, to $732.1 million (US$427.7 million), and a 10.7-per-cent increase in earnings before interest and tax, to $126.1 million ($73.7 million).

But the strong performance may be cold comfort, as the coronavirus outbreak and strict self-isolation measures introduced to contain the spread in certain markets have already seriously impacted Premier’s trade in the second half.

Smiggle sales have been “severely disrupted” in Hong Kong, Singapore and Malaysia, and “deteriorated significantly” in the UK and Ireland, the company said in a statement to the Australian Stock Exchange.

Trade in all brands in Australia and New Zealand has been impacted, and the company warned gross margin could be affected as it moves to clear inventory in each market.

Premier Investments CEO Mark McInnes declined to provide specifics on changes in sales or foot traffic, saying on a media call that the company was not “in control of what’s happening on a daily basis” and “merely responding” to the crisis at hand.

He described the current situation as “unprecedented” and unlike anything he has experienced, including the Global Financial Crisis in 2008 and recession in 1991.

He also warned there could be widespread store closures if landlords do not start supporting their tenants by renegotiating rents.

“Since the outbreak of COVID-19, we have closed two stores in Hong Kong, and we are prepared to close many more stores globally if landlords do not respond to the current crisis,” McInnes said.

While he noted that Premier Investments could exit 70 per cent of its leases in Australia and New Zealand with just 30 days’ notice, he said it wasn’t about “profiteering”, but rather “sharing the reality”.

“Historical rents are just…all we’re pointing out to landlords [is the reality of the situation],” he said.

This story first appeared on our sister site Inside Retail Australia.

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