Premier H1 net profit drops 13.7%

Solomon Lew's Premier Investments Ltd first half net profit dropped 13.7 per cent and is "cautiously optimistic" about the performance of Just Group.

Net profit for the 27 weeks ended January 30, 2010 was $42.44 million compared to $49.18 million in the previous corresponding period.

The results comes after Chairman Mr Lew told shareholders at its annual general meeting in November that "profits will be ahead of last year".

Premier, which owns the Just Jeans, Jays Jays, Dotti, Smiggle and Peter Alexander brands, said it recognised the retail environment continued to be challenging for Australian retailers due to the potential for further interest rate rises and the cycling of the 2009 fiscal stimulus.

"However, Premier is cautiously optimistic in relation to the relative performance of Just Group given its range of brands, their broad demographic coverage, the proven strength of its core and growth brands and a strong focus on retail fundamentals to achieve acceptable margin growth," the group said in a statement on Monday.

The company said because its moved its year end to 25 July 2009, in line with Just Group's year end, a direct comparison between the reported first half and last year's results was challenging.

Premier's current first half comprised 27 weeks, with the first half of 2009 being 29 weeks and five days.

Just Group's first half comprised 27 weeks, with last year's half being 26 weeks.

The company also earned substantial interest in 2009 first half on cash reserves which were ultimately used during the same period for the Just Group acquisition.

Premier said the "solid result" was underpinned by increased profits generated by Just Group, achieved in spite of a tough Christmas trading period and the cycling of the prior year fiscal stimulus measures.

Total revenue was up 6.3 per cent to $483.99 million.

Just Group's sales for the 27 weeks were up 9.3 per cent on the same time last year to $473 million.

It said its women's wear brand Portmans was "very disappointing", but it remained confident it can again become a strong contributor to the portfolio and represented significant upside potential.

Excluding Portmans, like-for-like sales were up 4.7 per cent and including Portmans, like-for-like sales were up 1.1 per cent.

"The group had excellent results from brands such as Just Jeans, Dotti and Smiggle," Mr Lew said.

"Building on the momentum produced by the leadership team at Just Group, Premier will be focusing on achieving consistent out-performance across all Just Group brands, with particular attention to lifting Portmans performance to match the returns from other brands in the portfolio."

Premier declared a fully franked interim dividend of 38 cents per share interim dividend, up one cent from the same time last year.