Premier won't repay subsidy despite profit

·3-min read

Premier Investments, owner of retail chains including Peter Alexander and Just Jeans, has defended not repaying $15.6 million in JobKeeper assistance after reporting an 88 per cent profit increase.

Chairman Solomon Lew and chief executive Mark McInnes on Wednesday said Premier used the subsidy to pay workers during coronavirus closures and would continue doing so in the event of more lockdowns.

Mr McInnes said it was impossible to predict what would happen during a global health crisis.

"The danger going forward is if there are snap lockdowns in future, who is going to pay those people?" he asked.

"We've made the commitment to do that."

The decision not to repay the funds contrasts with others.

Home furnishings group Adairs will repay at least $6.1 million of the more than $10 million it has received through JobKeeper. Nick Scali will repay $3.6 million. Super Retail Group is returning $1.7 million.

The federal government introduced the JobKeeper wage supplement last year. It was designed to help employers retain workers while many businesses were temporarily closed to stop the spread of the virus.

Mr McInnes said before JobKeeper was introduced, the company lost $131 million in sales from coronavirus closures between March and May.

Premier later collected the wage supplement and made a $188 million net profit in the 27 weeks to the end of January.

Premier said the JobKeeper money would not be used to pay shareholder dividends or management bonuses.

The business was ineligible for the second phase of the wage supplement from September 28 last year.

Premier's other retail outlets are Dotti, Jacquie E, Jay Jays, Portmans and Smiggle. The latter trades in Asia and Europe too. Premier is also a major shareholder in home appliance provider Breville.

Among the first-half figures, underlying earnings before interest and tax rose by 88 per cent to $238 million. This bettered the top of Premier's guidance range by $5 million.

"To have delivered these record results in a very difficult and volatile environment is a truly outstanding achievement," Mr Lew said.

During the first half, many of the group's retail stores were shut or restricted due to government health orders imposed to limit the spread of COVID-19.

But Mr McInnes said the company had taken a punt on increasing its inventory ahead of the summer Black Friday, Christmas and January sales.

"This decision ensured we were in-stock to deliver significantly higher sales and gross margin," he said in a statement.

He said those same inventory investments and strategies continued into the second half of 2020/21, with sales already tracking 32 per cent higher in the first seven weeks.

Premier's online sales also exploded during the half-year by 61 per cent, making up 20 per cent of all sales.

Its best performing brand was Peter Alexander, which sells sleep and home wear for adults and children. It delivered record sales of $208 million.

Premier will pay an interim dividend of 34 cents, in line with the previous corresponding period.

Shares were higher by 2.8 per cent to $23.87 at 1357 AEDT.