Premier Investments’ Smiggle to start selling beauty products for tweens

Retail king Solomon Lew’s Premier Investments is promising new beauty products like facial creams and lip gloss at Smiggle to win over tweens as it plots a turn around for the struggling kids stationery brand.

Mr Lew said a review of Smiggle found it needed to re-work the brand to focus on its original core demographic of 6 to 12-year-olds through new products, including in the beauty category, marketing and visual merchandising.

It comes as young girls increasingly dabble in skincare, fuelled by social media platforms like TikTok.

Across the world #Sephorakids, as they have been dubbed, are flooding beauty stores Sephora and Mecca, inspired by young influencers posting complex skincare routines to social media.

Through the beauty offering, Premier is set to tap into the child skincare market tipped to grow to nearly $600 million globally by 2028.

It will be a much-needed boost for Smiggle, which dragged down Premier’s half-year net profit to $101.7m, down 13 per cent on the same period a year earlier.

Premier on Friday reported sales at Smiggle and Peter Alexander hit $452.8m in the 26 weeks to January 24. Sales at Smiggle plunged 10.7 per cent to $140.5m, pulled lower by an 8.7 per cent cut in store numbers to 282.

The decline was partially offset by growing revenue at its popular Peter Alexander sleepwear stores, which pulled in $312.3m over the first-half — up 4.9 per cent.

Asked if Smiggle’s beauty offerings will be similar to Allkinds — believed to be Australia’s first skincare brand specifically catering to Gen Alpha’s — Mr Lew said it would be “more price-orientated”.

“It’ll be for the much younger generation and it’ll be very colourful,” Mr Lew told media on a call.

“We’ve always had an element of beauty, but I think that there is such demand today that the management decided that they needed to have that in their store.”

Mr Lew also had a dig at Wesfarmers-owned Kmart when asked if he was confident about Smiggle’s ability to target the 6 to 12-year-olds.

“They still need a backpack to go to school, they still need a water bottle, they still need a lunch box. That’s the basis of our business,” he said.

“If you want to go to Kmart and buy a $20 backpack, sure, but it’s going to last for two weeks, and then it’ll be torn . . . or something leaks in it, you can’t wash it.”

The $2 billion Premier continues to battle with dampened consumer demand amid higher inflation, back-to-back interest rate hikes and higher fuel prices triggered by the Middle East war.

But Mr Lew said he had not “seen a downturn in the last 18 days”.

“We sat with the board, we worked out our numbers, and we’ve put out an EBIT number that we are aspiring to and we’ll go from there,” he said.

Premier’s half-year 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.

Mr Lew on Friday declined to provide further information regarding the investigation into Mr Cheston.

“The lawyers have instructed me not to comment, but it is taking longer because it’s now an international investigation,” Mr Lew said.

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”.

The company, which also holds a 25 per cent stake in appliance maker Breville valued at almost $1b, will pay a fully franked interim dividend of 45¢.

So far this year, Premier shares are down 13.4 per cent to $11.98.

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.