Key headline numbers for FY18 on pcp are presented in the table below.

Figure 2: PMV FY18 P&L summary – key metrics

Source: Company, BTIG estimates

FY18 result highlights. Over the pcp and on an underlying basis, group sales were up +8.2% to $1.18bn, with like-for-like sales up +3.3%, driven by continued growth in Smiggle and Peter Alexander as well as positive momentum within the apparel brands. Underlying EBIT was up +10.3% to $150.1m, with EBIT margin up +25bps on better cost control, particularly employee expenses (down 120bps as a percentage of sales). Gross profit margin decline of -60bps highlighted the competitive retail trading environment. Cost of Doing Business for the year declined by 90bps as a percentage of sales to 49.9%. The group delivered ongoing cost efficiencies, despite structural inflationary pressure and the significant investment in the growth initiatives including Online, Smiggle International and Peter Alexander. Underlying net profit before tax was up +9.2% to $160.3m and net cash flows from operations for FY18 were up +37% to $133.9m. The Chairman noted, “I am delighted to report that the online business surpassed our original 2020 target of $100 million more than two years ahead of plan, delivering sales for the year of $112.5 million – up 65% on FY17.” Management declared a final dividend of 33cps (fully franked), taking the dividend for FY18 to 62cps, an increase of +17% compared to pcp.

Smiggle’s delivers record results. Smiggle achieved record global sales of $293m in FY18, up +22.7% compared to pcp. The brand opened 52 new stores globally and Online sales exceeded 10% of sales in countries with a transactional website. 67% of the FY18 sales were delivered from outside of Australia. At the end of FY18, Smiggle had 347 stores across Australia, New Zealand, Singapore, England, Scotland, Wales, Northern Ireland, Hong Kong, Malaysia and the Republic of Ireland. Smiggle Asia had an exceptional year, with Singapore, the most mature of the Asian markets, enjoying strong LFL growth with tourists providing valuable insights into potential new Smiggle markets. Smiggle Hong Kong opened four new stores during the year, taking the total count to 14 stores, in line with the original plan. Smiggle Malaysia opened six stores during FY18 taking total stores to 17, well ahead of previous guidance. Smiggle UK delivered strong sales growth for the year with the brand navigating Brexit better than most retailers due to the unique nature of the brand and strategy execution. There were 134 stores trading in the UK at the end of FY18. The UK Online channel delivered 15% of total UK sales for the year.

Peter Alexander – 2020 Growth Plan tracking well ahead of expectations. Peter Alexander delivered record sales in FY18 of $218.7m, up +14.5% over pcp and strong LFL sales. Management noted that the 2020 Growth plan is progressing ahead of expectations, with annual sales expected to exceed $250m by FY20. 21 new stores were opened in FY18 – putting the brand ahead of the 2020 plan to open 40 new stores between FY18 and FY20. Five new stores have been confirmed for opening in 1H19. The expanded range of P.A. Plus size delivered exceptional 100% growth for the year.

Smiggle’s accelerated global growth strategy announced. Smiggle announced a major strategic accelerated global growth plan with the aim to deliver the targeted $450m in global Smiggle retail sales by FY20 and to set up pathways for major growth beyond FY20. The accelerated global expansion would come from 4 major channels; Online, Global concession partnerships, Global wholesale arrangements and New store growth.

Figure 3: PMV Financial Summary 

Source: Company, BTIG, Bloomberg