Premier pours water on Christmas sales

Premier Investments Ltd chairman Solomon Lew has hosed down Harvey Norman-driven
expectations of a bumper Christmas sales season while reassuring investors the group
is on track to improve profits in fiscal 2010.

Premier's business, which includes the Just Group with brands such as Just Jeans,
Jay Jays, Portmans, Jacqui E, Peter Alexander, Dotti and Smiggle, has posted a 6.7
per cent rise in sales for the first 17 weeks of fiscal 2010.
Like-for-like sales to November 21 were 2.7 per cent higher than the prior
corresponding period, leaving the board "confident" of increased earnings before
interest, tax and amortisation (EBITA) for the year to July 25, 2010.
"Profit will be ahead of last year," Mr Lew told journalists after Premier's annual
general meeting in Melbourne.
"Our business is on track to do very well for the half.
"But it all depends on the Christmas, January trading."
Premier's 2008/09 net profit soared 98 per cent to $82.7 million for the 55 weeks to
July 25, 2009, despite flat sales growth for its first 17 weeks and a six per cent
fall in like-for-like sales.
Premier remains "extremely cautious" on the global economic outlook, and cautiously
optimistic on the Australian economy.
Mr Lew warned a December interest rate rise by the Reserve Bank of Australia (RBA)
would be a "big dampener" for the intensely-competitive local retail sector.
The RBA should wait to see what happens in the housing sector, as well as job
prospects for school leavers and university graduates in 2010, Mr Lew said.
Gerry Harvey, chairman of electronics and homewares retailer Harvey Normal Holdings
Ltd, has said retailers would have a happy Christmas and that Harvey Norman's
festive season sales were set to "break all records".
But Mr Lew said Mr Harvey's expectations reflected Harvey Norman's weak first half
2008/09 result.
"I think that he's also talking about increasing his profits but he had a very poor
half last year and he's coming off a very low base," Mr Lew said.
Mr Lew maintains consumers are still shopping, but retailers that do not pitch the
right offer at the right price will not make money.
Unlike some of its competitors, Premier has not been prepared to sacrifice margins
to chase sales, he said.
Fourteen months after buying Just Group and transforming itself from a listed cash
box to the owner-operator of some of Australia's best-known clothing brands, Premier
has almost tripled its market capitalisation which stood at $1.25 billion on Monday.
But the success of its growth platform now depends on a turnaround of the
beleaguered Portman's brand.
Mr Lew said this was probably another 12 months away after new managers find their
feet and the right product is sourced.
"It's a question of stabilising the business before we really start making the
returns that we require on the business," he said.
Premier is likely to make another acquisition of at least one good quality
Australian business in the next 12 months, he added.
It is also expanding its Smiggle stationery brand into Singapore, Hong Kong, and
Malaysia.
Premier's stock climbed 30 cents, or 3.63 per cent, to $8.56.