Premier Investments’ Solomon Lew paints bleak picture for Australian consumer sentiment

Premier Investments’ billionaire chair Solomon Lew has painted a bleak picture for consumer sentiment as he warned Australians not to expect any relief in the Federal Budget next week due to excessive government spending.

Unveiling a 30 per cent slump in half-year net profit on Friday, Ms Lew said cost of living pressures have not stopped going up, pointing to higher energy, fuel and health bills.

“I think that we will look at the budget next week . . . it’s spend, spend, spend by the government,” he told media on a call.

“I’m concerned for the generations that are behind me that they will never be able to pay off the debt (resulting from) the current spending.

“So I suppose for retailers, they need a reset. And one of our opportunities, of course, is with interest rates, but they don’t seem to be going to come down.”

Asked on his outlook for consumer sentiment moving forward. Mr Lew said: “Can you tell me who’s going to lead the country from May onwards? That may give you a clue as to what will happen.”

His comments came after Premier revealed sales at its kids stationery business Smiggle plunged to $157.3 million in the 26 weeks to January 25, down 14.5 per cent on the same period a year ago.

Premier blamed the sharp fall on a challenging global discretionary retail environment, with Smiggle customers “particularly exposed to increased cost of living pressures” across its network of 307 stores in 20 countries, including the key markets of Australia, NZ, the UK, Ireland, Singapore and Malaysia.

But it said the brand was well-placed to rebound as global economic confidence returns. It is looking to open another 10 stores in the near-term and develop wholesale partnerships in new markets with an eye on further expansion.

Smiggle and popular sleepwear brand Peter Alexander were retained by Premier after selling its Apparel Brands portfolio — which includes Just Jeans, Jay Jays, Jacqui E, Portmans and Dotti — to department store chain Myer in January.

Premier said total sales for the first-half, which included Apparel Brands, fell 1.7 per cent to $875.1m.

Net profit plummeted 34 per cent to $117m as it copped significant expenses and transaction costs associated with the sale of Apparel Brands.

The downturn at Smiggle was offset by Peter Alexander, which achieved record sales of $297.7m — up 6.6 per cent on the same time a year earlier.

But that did not include sales from its recently launched UK stores, with three sites opened in prime locations in London.

Profit from continuing operations, which takes into account the deal with Myer, dropped 18.4 per cent to $101.3m. Profit from continuing operations, excluding significant items, was $148.4m.

Mr Lew acknowledged the “very difficult times given the relative performance of competitors where trading conditions continued to be challenging”.

Premier — which also holds a quarter share in appliance maker Breville, valued at about $1.15 billion — did not pay a dividend. It ended the half with $337m in cash.