Possible breakup of $3.5B Premier Investments empire amid CEO resignation

Company News

by Glenn Dyer

Strong indications emerged on Monday that Solomon Lew might consider dismantling his vast $3.5 billion fashion retail conglomerate, Premier Investments (ASX:PMV), following the unexpected resignation of CEO Richard Murray.

In a disclosure to the ASX on Monday, Premier Investments announced its intention to conduct a structural review. The decision stems from the recognition of the expanded scope of Premier Retail's diverse businesses, including prominent brands like Smiggle and Peter Alexander. The company highlighted substantial growth prospects for each of these entities.

To facilitate this review, Premier Investments enlisted the services of UBS and Melbourne-based law firm Arnold Bloch Leibler.

The company offered rationale for the review, stating, "Peter Alexander’s sales have more than doubled from five years ago and the brand has identified significant growth opportunities for new and/or larger formats and planned offshore market expansion."

They went on to describe Smiggle's established international presence through a combination of proprietary and wholesale stores. Smiggle operates around 300 proprietary stores across various countries and services up to 800 wholesale doors during peak periods.

Premier Investments also pointed out ongoing growth in its Apparel Brands across Australia and New Zealand, represented by five trusted brands. The company aims to optimize store layouts, explore new formats, and enhance online execution for these brands.

The statement indicated Premier's commitment to positioning each brand to seize growth opportunities in the best interest of shareholders.

The review, which contemplates a range of possibilities, includes an examination of Premier’s corporate, operational, and capital structure. This could involve dividend policies and even the separation of the group into distinct entities through a demerger. The review will analyse capital requirements, business plans, management structures, costs associated with separation, and any potential dis-synergies.

Notably, the announcement of the structural review was made separately from the news of the CEO's departure. This timing has led some investors to speculate about a connection between the two events, especially given the absence of remarks from Mr. Murray in the statement.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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