Sliding sales at kids stationery brand Smiggle drags down profit at Solomon Lew’s Premier Investments

Falling sales at struggling kids stationery brand Smiggle has dragged down first-half profit at retail king Solomon Lew’s Premier Investments. The decline was partially offset by growing revenue at its popular Peter Alexander sleepwear stores, which pulled in $312.3 million in the six months to January 24 — up 4.9 per cent on the same period a year earlier. Sale momentum had also carried through to the first seven weeks of the second half. Sales a Smiggle plunged 10.7 per cent to $140.5m, pulled lower by an 8.7 per cent cut in store numbers to 282 as the brand focused on operational efficiencies. The fall saw Premier’s net profit tumble 13.1 per cent to $101.7m, with the company noting “a challenging general discretionary retail environment with consumers continuing to face increased cost of living pressures”. Earnings before interest and taxes hit $119.3m, in-line with the guidance provided in December. Premier also announced the appointment of Georgia Chewing, who was named interim chief operating officer of Smiggle late last year, to the role of managing director. Smiggle had been without a CEO for more than a year after Mr Lew dumped John Cheston amid allegations of serious misconduct, including claims of former executives being drunk during work hours, bullying, sexual harassment and bribery. Premier on Friday said a detailed review of the Smiggle brand during the first half had shown the stores had proven their resilience through various cycles but it would now return to focusing on its original core customer base of six to 12-year-old. “The Smiggle team has set a clear strategic objective to reclaim the six-12 year core customer market through innovative product, marketing and visual merchandising, utlising Smiggle’s existing multichannel formats to drive sustainable sales and profit growth,” it said. Premier told investors that the second half would be a period of “transition” to aid the reset, with new products and category launches planned for the first six months of the new financial targeting a return to growth. Four new Peter Alexander stores were opened during the half, and another 15 opportunities have been identified for new and larger format stores in existing markets “to better showcase the wider product offering that has been developed as the customer base for the brand continues to broaden”. Premier also hailed the success of its Peter’s Dreamer loyalty scheme which launched in October and is now set to have more than one million customers by the end of the financial year. “Peter’s Dreamers customers contributed 60 per cent of brand sales during 1H26, at an average transaction value 45 per cent above non-members,” it said. “Management sees further opportunities to use data and insights to enhance customer experience.” The company, which also holds a 25 per cent stake in appliance maker Breville valued at almost $1 billion, will pay a fully franked interim dividend of 45¢. Mr Lew said the past few years has been a period of significant change for the business. “Today, we have a leaner business. The Premier Investments board is keen to see our brands operate with the speed and agility required to keep pace with consumer trends and spending volatility,” he said. RBC Capital Markets analyst Michael Toner noted EBIT came in slightly higher on its expectations of $118.7m, but was below consensus expectations for a $120.2m figure. But he described it as “a decent outcome given the soft trading environment”. RBC Capital Markets analyst Michael Toner said earning came in slightly higher on its expectations of $118.7m, but was below consensus expectations of $120.2m. But he said this was “a decent outcome given the soft trading environment”. “Guidance (for full year earnings of $183m) implies an improvement in last reported trading momentum, with the company noting that Peter Alexander)s first seven weeks of trading is exceeding the first half sales growth trend,” he said.