ASX:PMV
Premier Investments Ltd
Investment Summary
The fund managers believe that Premier Investments Ltd (PMV) presents significant investment potential, highlighting the company's strong management, led by Solomon Lew. They note that PMV is likely to experience positive earnings surprises owing to conservative market expectations. The recent binding agreement with Myer to exchange PMV’s Apparel division for shares represents a strategic move that could unlock shareholder value, as it allows PMV to focus on its strong growth brands, particularly Peter Alexander and Smiggle. However, challenges persist, especially with Smiggle facing underperformance and management changes. Despite a projected decline in earnings, the fund managers remain optimistic about PMV's long-term prospects, particularly with the anticipated spinoff of its strong growth brands over the next few years. They assert that this restructuring will enhance operational efficiency and shareholder value. At current market valuations, PMV appears undervalued relative to peers, suggesting compelling upside opportunities for investors who remain patient.
Commentary From The Managers
Endeavor Asset Management
31 Jan 2025
$23.88
Endeavor Asset Management
31 Oct 2024
$25.59
- Endeavor Asset Management continues to monitor Premier Investments (PMV) closely following updates in the September and August newsletters.
- The initial belief was that the break-up of PMV divisions would enhance shareholder value.
- PMV’s share price experienced a decline as the focus shifted towards a strategic deal with Myer (MYR).
- In October, PMV's board signed a binding agreement with Myer to sell its Apparel division.
- The Apparel division includes brands such as Just Jeans, Jay Jays, Portmans, Dotti, and Jacqui E.
- As part of the agreement, PMV will receive 51.50% ownership of Myer and will distribute this to shareholders.
- The in-specie distribution accounts for approximately 20% of the current PMV share price.
- This strategy aims to free up legacy brands and refocus on the spin-off of Smiggle and Peter Alexander.
- The market reacted positively, with a nearly 10% increase in share price on the day of the Myer announcement.
Endeavor Asset Management
31 Oct 2024
$25.59
- Endeavor Asset Management updates their investment thesis on Premier Investments (PMV) following recent developments.
- Previously discussed in Growth Equities Portfolio’s August and High Conviction’s September newsletters.
- The belief that splitting PMV divisions like Smiggle and Peter Alexander could unlock shareholder value remains strong.
- In October, PMV’s board announced a binding agreement with Myer.
- Myer will issue new shares to PMV in exchange for PMV’s Apparel division and $82 million cash.
- This transaction gives PMV a 51.5% stake in Myer, to be distributed in specie to shareholders.
- The stake represents ~20% of PMV’s current share price, showcasing Premier's execution strength in retail.
- Following the announcement, PMV’s share price rose nearly 10%.
Endeavor Asset Management
30 Sept 2024
$23.35
- Endeavor Asset Management notes a 12.7% decrease in Premier Investments' share price due to the deferral of the anticipated demerger proposal.
- The demerger was delayed as a result of Myer's proposal to combine with PMV's Apparel Brands business.
- Despite these developments, PMV reported strong results from Peter Alexander but a softer performance from Smiggle, along with some middle management departures.
- Endeavor Asset Management remains confident in PMV's leadership, citing them as some of the best retailers in the country, with Solomon Lew serving as the largest shareholder.
- Overall, Endeavor Asset Management believes that their investment thesis is intact.
Blackwattle Investment Partners
30 Sept 2024
$23.35
- Blackwattle Investment Partners notes that Premier Investments (PMV) reported a decline in its mature Apparel Brands and Smiggle in July FY24, with drops of -6.4% and -7.4% respectively compared to FY23.
- Trading for the first 7 weeks of FY25 has been weaker than anticipated.
- Challenges are evident from sluggish household spending, particularly affecting younger families and Smiggle.
- Recent management changes at Smiggle, including the CEO's departure, have raised additional concerns for the division.
- A restructuring of the group is delayed as management evaluates the merger proposal with Myer (MYR).
- In contrast, Peter Alexander's performance remains positive with FY24 sales increasing by 6.2% year-on-year, entering the UK market with 3 new store openings planned before Christmas.
- The UK market represents a significant growth opportunity, with potential for expansion into additional countries.
- Excluding stakes in Breville (BRG) and Myer, PMV trades at a low double-digit PE, significantly below peers like Lovisa (LOV).
- Blackwattle anticipates that PMV's discount to peers will narrow as the company addresses its challenges, especially with Smiggle.
- The Fund's underweight position in the Financials sector, particularly major banks, has mitigated some performance drag from Consumer Discretionary names.
- Australian major banks are trading at PE premiums of 50-100% relative to global counterparts, limiting long-term growth due to high household leverage.
- Dividend yields for banks like CBA are becoming less attractive compared to other sectors, with current yields noted at 3.5% versus 4.9% for Telstra for FY25f.
Endeavor Asset Management
31 Aug 2024
$26.57
- Endeavor Asset Management has entered Premier Investments (PMV), a fashion retailer conglomerate.
- PMV is chaired by Solomon Lew, a notable Australian businessman.
- Recent results from JB Hi-Fi, Universal Stores, Breville, and Myer showed that market expectations were overly pessimistic.
- There is a reasonable chance of a positive earnings surprise for Premier due to conservative consensus estimates.
- PMV is expected to report results later this month, viewed as a positive catalyst for the stock.
Endeavor Asset Management
31 Aug 2024
$26.57
- Endeavor Asset Management has entered Premier Investments (PMV), a leading fashion retailer conglomerate.
- PMV is chaired by successful Australian businessman Solomon Lew.
- Recent reporting season results from JB Hi-Fi, Universal Stores, Breville, and Myer showcased a gap between market expectations and actual performance.
- The results indicate that performance was not as bad as feared.
- PMV is supported by one of the best management teams in the ASX.
- Endeavor Asset Management considers PMV to be their preferred retail exposure.
Blackwattle Investment Partners
31 Mar 2024
$23.93
- Blackwattle Investment Partners sees potential in Premier Investments Ltd (PMV.AX) based on its strategic review findings.
- The company is planning to spin off strong growth brands – Smiggle and Peter Alexander – over 2024-2025.
- This aligns with Blackwattle's investment thesis that the market will eventually recognize the value of these brands.
- The international growth opportunity for Peter Alexander and Smiggle is a key factor in the thesis.
- Currently, margins and profitability of these brands are not disclosed separately, leading to their value being under-appreciated by the market.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.