Today Premier Retail announced a positive trading update for their 1H17 that ended on 28 January 2017 reflecting total sales growth in excess of 7% and underlying EBIT growth in the range of 9.4% to 10.6% when compared to the 26 weeks in the prior comparative period. This is a decent scorecard and reflects just how bifurcated the market is with several high-profile specialty retailers such as Marcs, David Lawrence, Herringbone, Rhodes & Beckett, Payless Shoes and Pumpkin Patch going into voluntary administration in recent weeks.
Whilst consumer tastes and competition are certainly part of the reason for the changing consumer landscape, management is also a key determinant, with Premier Retail having one of the best retail management teams in the country and certainly on the ASX.
The consumer discretionary sector had retraced 6% since the start of CY17 following a broker / client update with mixed anecdotal December 2016 and January 2017 trade feedback, which, together with the spate of specialty retailers falling into VA listed above, weighed on Premier’s share price. Whilst short-interest in the stock is negligible, a strong share price recovery is expected.