Colourful children’s stationery chain Smiggle is expanding into Europe, with the star performer of Solomon Lew’s Premier Investments group now set a target of passing $400 million in sales in three years.
Smiggle had another record year in 2016/17, with sales hitting $238.9 million in the 12 months to July 29 – up 29 per cent on the prior year.
The 300th Smiggle store has just opened and the chain now operates in Australia, New Zealand, the United Kingdom, Singapore, Malaysia and Hong Kong.
“The Smiggle business continues to outperform all our expectations,” Mr Lew said after unveiling a group profit of $105 million.
“The strength of sales growth reflects not only new markets but continued growth in its more established markets.”
Mr Lew said Smiggle has come a long way since Premier bought it nine years ago when it had only 35 stores in Australia and was making $19 million.
Smiggle is now the jewel in Premier’s crown and, as of 2016/17, is not only the group’s high growth business but also its single biggest by turnover.
Mr Lew said following on from Smiggle’s success in the UK, where it has been operating for four years, and its recent successful launch into Ireland, Premier feels ready to roll it out across Europe, starting with the Netherlands and Belgium in 2018.
The plan is for 40 to 50 stores across the two countries over the next four to five years, which is expected to help drive Smiggle’s global sales past $400 million by 2019/20.
Premier’s chief executive Mark McInnes said UK infrastructure will help keep costs down in expanding into those markets.
And a requirement to use French language products in Belgium will provide insights that will help the group look at potential expansion to France and Canada, he said.
Smiggle and its successful stablemate, sleepwear chain Peter Alexander, have offset weakness from the group’s other apparel brands Portmans, Jacqui E, Dotti, Just Jeans and Jay Jays.
The group’s like-for-like sales rose 1.1 per cent, on a constant currency basis, while online sales jumped 44 per cent to $68.1 million and now makes seven per cent of sales.
Mr McInnes said unrealistic rent expectations have forced the group to close its Just Jeans and Portmans flagship stores in Melbourne’s Bourke Street Mall in October.
Those stores generated more than $5 million in sales but it was a sacrifice the group was willing to make, partly because its online and growth brands were so successful, he said.
He said landlords were offering more favourable rents to overseas retailers over locals, which have driven many local retailers out of business.
Premier shares closed down 35 cents, or 2.6 per cent, at $13.40 on Monday.
SMIGGLE LEADS PREMIER’S GROWTH:
* Full-year net profit up 1.2pct to $105.1m
* Sales revenue up 4pct to $1.1b
* Fully-franked final dividend up 2.0 cents to 27 cents