Fund Managers Say Premier Investments' Retail Business Is Priced For Free

A December guidance miss tied to Smiggle sent the stock to a 10-year low, but not every manager agrees the brand can't recover

31 May 2026 · 6 min read

Ellerston Capital's May 2026 monthly report made one of the sharpest valuation arguments any manager has put on Premier Investments this year. Having fallen from $22.00 in September 2025 to $12.60, the manager said the stock's 25.2 per cent stake in Breville is worth $1.05 billion on its own, and combined with net cash and property adds up to $8.80 a share, meaning the market is effectively valuing the entire Peter Alexander and Smiggle retail business at only around $2.80 a share. Against expected combined EBIT of roughly $180 million from those two brands, Ellerston called the implied 2.5 times EBIT multiple absolutely ridiculous and totally mispriced, adding that Peter Alexander alone trades at an 80 per cent discount to its apparel peer average despite industry-leading margins and return on equity.

Given the expected ~$180m of EBIT generated from the combined PA/Smiggle businesses, the market is implying a valuation for the retail business at 2.5x EBIT — absolutely ridiculous and totally mis-priced.

— Ellerston Capital, Monthly Report, May 2026

How the stock got this cheap

The decline traces back to a December 2025 guidance miss. Ellerston Capital reported at the time that Premier's first-half FY26 retail EBIT guidance of $120 million represented a 10 per cent miss against consensus expectations of $130 million to $135 million, driven largely by Smiggle and in particular its UK business, even as the Peter Alexander brand continued to show consistent, solid performance. The stock fell 16 per cent on the release despite the company simultaneously announcing a $100 million buyback and flagging further capital management plans to be assessed. Investor frustration was compounded by news that Smiggle's interim COO role had been filled internally by the head of e-commerce, given what the manager described as a dragged-out search for a permanent leader with global experience.

Not every manager saw the same picture. Oracle Advisory Group exited Premier entirely in October 2025, arguing its original thesis no longer held up after Premier sold its Apparel Brands business to Myer, leaving only two growth brands behind. The manager said Peter Alexander was still achieving good growth, with sales up 7.8 per cent, but it had lost faith that Smiggle could recover, pointing to declining sales over two years as high interest rates strained the young families who are its core customers, and to cheaper competition from Temu, Kmart and Amazon making the brand's premium pricing increasingly unappealing.

Smiggle has been struggling to recover since COVID, and they have had to deal with not having a CEO in place. Sales have been on a decline for the past two years... We don't have faith that this can turn Smiggle's fortunes around.

— Oracle Advisory Group, Quarterly Report, December 2025

The contrarian case for buying the dip

Lanyon Investment Fund took the opposite side of that trade in the same December 2025 quarter, buying shares after the sell-off it said had left the market simultaneously valuing Smiggle at zero and applying an 80 per cent-plus discount to Premier's Breville stake. The manager argued this created a compelling opportunity to invest in a highly mispriced business alongside a management team with a long and successful track record of delivering shareholder value, and said the market was overly fixated on short-term cyclical weakness rather than the growth opportunity still ahead for both Peter Alexander and Smiggle, while underappreciating the optionality provided by a $333 million cash balance and the Breville stake.

Airlie Funds Management struck a similarly patient tone in a January 2026 webinar, after Premier downgraded its first-half FY26 profit guidance again. The manager said the issues were largely isolated to Smiggle, only a small portion of group earnings, and that the business was trading on around 10 times look-through EBIT, a steep discount to the small industrials index, prompting it to remain a patient holder rather than sell into the weakness.

What managers are watching next

Ellerston Capital's May 2026 update noted Smiggle now has a turnaround strategy in place, guiding toward positive like-for-like sales in the first half of FY27, a target that will be the clearest test yet of whether the brand can arrest its multi-year decline. Alongside that, managers are watching whether Premier appoints a permanent Smiggle leader with global retail experience, and whether the current 2.5 times implied EBIT multiple on the retail business starts to close as capital management initiatives beyond the existing buyback are announced.