The Premier Investments Limited (ASX: PMV) share price surged more than 12% immediately after opening on Thursday after the retail player provided an update to investors.
While Premier disclosed that sales were down 18% globally on the 2nd half of 2020 (falling $106.5 million), it was the positive earnings before interest and taxes (EBIT) news that drove the price rise. The announcement also stated that the online sales figures now accounted for more than a quarter of total sales, which is more than double that the previous year. An increase in online sales is consistent with what we are seeing across the retail space, as a response to the COVID-19 situation.
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Is the Premier Investments share price still a buy?
Prior to the market crash in March this year, the Premier Investments share price was sitting comfortably around $19–$20. COVID-19 hit the retailer hard, with share prices plunging more than 60% in the space of one month. However Premier bounced back in a very positive way. After hitting lows of around $8.00 on 24 March, the share price rose to $17.90 over the following 3-month period, showing strong resilience.
The Premier Investments share price previously reached $21.50 in March. Even with Thursday's 12% price surge taken into consideration, investors are able to purchase shares at a 3.5% discount to those previous highs.
Historical performance
The Premier Investments share price has risen more than 180% over the last 10 years, or approximately 18% per year. This is a steady return by any measure, however isn't the most impressive number. Since listing on the ASX in 1987, Premier Investments has delivered gains of around 1,800%.
Personally, I like to know the historical performance of a company I'm considering investing in. It's easy to get caught up in the day-to-day news, however long-term performance is the ultimate winner. Premier Investments has certainly delivered strong returns for investors in the past.
Dividend
Growth aside, Premier Investments also offers a dividend to its investors, currently returning around 4.2% yield. This has been paid since 2009, however the dividend yield has been volatile over the years.
About Premier Investments
Premier Investments Limited wholly owns the Just Group. It also holds a 28.06% stake in Breville Group Limited. For those not familiar, the Just Group owns well-known brands such as Smiggle, Peter Alexander, Just Jeans, Jay Jays, Portmans, Jacqui E and Dotti. Investors will notice the attention to the retail industry. This is because Premier Investments has built its company around the retail, importing and distribution industries. It also has a focus on Australian companies in general.
Foolish takeaway
In this economy, we can't expect companies to increase sales unless they are directly related to growing markets, such as technology. The next best thing is to increase profits. Premier Investments has done exactly that, which is why the market responded so positively yesterday.
Premier owns well known brands with loyal customers that will continue to shop online. I have no doubt the percentage of total sales attributed to online orders will continue to grow and this could very well be the saving grace in an uncertain market, and could bode well for the Premier Investments share price.
