This morning Australian diversified retail heavyweight, Premier Investments Limited (ASX: PMV), delivered a strong set of half-year results, on the back of significant growth within a number of key brands.
In the six months to 24 January 2015, Premier's revenue grew 4.15% to $496.98 million with net profit after tax, or NPAT, climbing to $56.8 million, up 9.07% on the prior corresponding period.
These good results come despite a number of retail stores, including Myer Holdings Ltd (ASX: MYR), positing lacklustre results in the midst of waning consumer confidence.
The proponent behind the strong results was an ongoing expansion in key brands, Smiggle and Peter Alexander. Total sales for each brand during the period were up 18.9% and 14.6%, respectively.
Coupled with a growing online presence, the two brands helped widen Premier's EBIT (earnings before interest and tax) margin, to 14.3%.
Pleasingly, with $285 million in cash and just $95 million of debt, Premier's board resolved to declare a fully franked dividend of 21 cents per share.
In addition, a special dividend of 9 cents per share will be paid – taking the total half-year payout to 30 cents per share, fully franked. Premier said the two dividends will be payable on 18 May 2015.
Premier's franking credit pool (the 'credits' shareholders receive from the ATO when they get their fully franked dividends) stood at $204.6 million at 24 January 2015.
Premier said its ownership stake in fellow ASX-listed retailer, Breville Group Ltd (ASX: BRG), was worth $256.4 million.
Commenting on the results, chairman Solomon Lew said, "This is an excellent result in a challenging market in which consumer confidence remains volatile. Management has achieved top line sales growth, disciplined cost management and continued margin expansion."
He said the company's ongoing push into the United Kingdom bodes well for future results, "We are delighted with the performance of our Smiggle UK business – today we have 19 stores trading and we plan to open a further 14 stores this calendar year."
Should you buy Premier Investment shares?
Premier Investments has a rock-solid balance sheet, savvy management team at its helm and a number of strong retail brands under its control. Although, on first glance, its shares may appear expensive using conventional valuation metrics – it currently has a price/earnings ratio of 20 – investors have the opportunity to buy into one of the ASX's best retail stocks at only a slight premium to the market. In this Fool's opinion, if investors have a view to the long term, its current share price is justified and its stock looks to be a good buy.
