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Billionaire Solly Lew lashes out at landlords, Myer

by September 25, 2017 General

Veteran retailer and billionaire Solomon Lew has lashed out at “unrealistic” property landlords, blaming them for the closure of the flagship Just Jeans and Portman stores in Melbourne’s Bourke Street shopping mall.

Mr Lew stepped up his rhetoric against landlords after his Premier Investments group unveiled a modest 1.2 per cent increase in 2017 net profit, announcing the closure of the 30-year old Bourke Street stores.

Mr Lew and Premier chief executive Mark McInnes said more stores would close if landlords did not cut rents and provide the group with similar deals to those they were giving to international fast fashion chains.

“Landlords have been giving international chains cheaper rental, sometimes two-thirds cheaper than specialty retailers,” Mr Lew said on Monday.

“They are doing this because they want to drive traffic … the discount department stores are not driving traffic so they are looking for other tenants.”

Premier revealed it closed eight stores nationally this financial year, adding to a much larger five-year tally of 80 unprofitable shops.

“We don’t want to close stores but unless landlords recognise the changing landscape we have no choice,” Mr McInnes said.

Just Jeans and Portmans would close in Bourke Street in October, they said.

The closure follows other fashion retailers, General Pants Co and Cotton On, also looking to exit the famed pedestrian shopping strip.

‘Lost their way’

Speaking to investors and the media, Mr Lew broke his silence about Premier’s 11 per cent stake in Myer, saying he was “bitterly disappointed” at the 37 per cent fall in the group’s share price since it was acquired in March.

“Everyone knows they’ve lost their way … the markets were informed  in March that things were going well. You would have thought the worst was behind them,” he said.

Mr Lew, Myer’s biggest shareholder, said Myer was trying to sell apparel that was up to three years old and “belongs in the Salvation Army”.

“You know that by seeing their most recent forays into the discounting and opening of these outlet floors that the stock is two to three years old,” Mr Lew said.

His comments came as Premier reported full-year net profit of $105.1 million, just missing analyst estimates of $111.7 million as weak sales of clothing brands Portmans, Dotti, Jacqui E and Jay Jays offset strong growth at its Smiggle stationery chain, Peter Alexander sleepwear stores and in online sales. 

The group reported sales revenue growth of 3.98 per cent to $1.1 billion.

Underlying earnings rose 7.3 per cent to $136 million, beating expectations of about $130 million, while the company lifted its final dividend by 2¢ to 27¢ a share, fully franked.

“Premier … has again delivered a very strong performance with solid growth in sales and underlying earnings despite the very difficult retail conditions,”  Mr Lew said in a statement.

Smiggle expansion

Sales for the Smiggle brand jumped 28.8 per cent to $238.9 million, helped by the opening of 58 new stores globally and solid like-for-like sales globally, while Peter Alexander sales were up 14 per cent at $190.9 million, with 11 new stores.

The online business also significantly outperformed the market, with sales up 44.3 per cent at $68.1 million, it said.

Premier said it planned to take Smiggle to Continental Europe, opening stores next year in the Netherlands and Belgium, which together have a personal stationery market worth $US1.7 billion. It expects to have 40-50 stores in these two markets over the next four to five years.

It is targeting global revenue of more than $400 million for Smiggle by 2019-20.

At the end of the financial year, Smiggle had 297 stores across Australia, New Zealand, Singapore, England, Scotland, Wales, Northern Ireland, Malaysia, Hong Kong and the Republic of Ireland.

More than 60 per cent of Smiggle sales now come from outside Australia, with the UK becoming its biggest market in the second half of the financial year.

Premier also outlined plans to grow Peter Alexander, targeting revenue in excess of $250 million by 2019-20, through opening 40 new stores over the next three years, upgrading 12 existing stores and extending its bath and body, childrens’ wear and plus size offerings.

It said it expected to exceed its annual online sales target of more than $100 million earlier than the originally planned 2020. 

with wires