Premier was one of the first major retailers to close its 900 stores in the face of the coronavirus pandemic, joining hundreds of others such as Myer, Adairs, Uniqlo and Mosaic.
Announcing the stores’ reopening on Tuesday, the company revealed the cost of the six-week shutdown: Total sales across the business plummeted 74 per cent, and in-store sales globally dropped 99 per cent to near-zero.
Online sales doubled over the period, however, with the company’s largest online brand Peter Alexander’s digital sales up 295 per cent. Online sales alone at Peter Alexander for the week ending May 2 exceeded the total online and in-store sales made in the same week last year.
Digital sales at the company’s New Zealand operations for the nine days up to May 6 grew a massive 560 per cent.
The retailer hinted the online boom could see it shrink its store network following the pandemic, echoing the views of other Australian retailers who are already looking at closing 20 per cent of their stores.
“The COVID-19 pandemic has significantly increased that existing trend and could hasten the substantial retail restructure already underway,” Premier said. Seventy per cent of Premier’s store leases are in holdover or expire next year, providing the retailer with significant flexibility when assessing store closures.
Premier, which is owned by billionaire retailer Solomon Lew, did not pay rents during the shutdown and took a hardline stance with landlords which it believed were not acting in tenants’ best interests.
From Friday onwards and throughout the recovery period, Premier will pay rent at a gross percentage of store-based sales, with the retailer again putting the onus on landlords such as shopping centre owners to help get the economy running again.
“As part of this critical process, it is incumbent on those landlords to demonstrate and announce the actions they are taking to ensure a healthy and safe environment for our employees and customers to confidently return to shops,” Premier said.
Store operations ‘highly uncertain’
Store operations will be “highly uncertain and unpredictable”, it said, and the company warned it would have imbalanced inventory levels until potentially December.
Mr Lew said the company was signed up for the government’s JobKeeper scheme and had already made April’s payments to its 9000 employees. The veteran retailer also praised the government’s response to the crisis.
“The 3-step framework for a COVIDSafe Australia is an extraordinary achievement when compared to the rest of the world, which will support over a million Australian retail employees safely returning to work,” he said.
Premier made no predictions for its earnings in the second half of its financial year ending July, warning sales and margins would be highly uncertain and dependent on consumers’ enthusiasm to return to shops.
“Given the uncertainty around the timing of the recovery, it is impossible to forecast the extent of the impact on second-half earnings until we have actualised the result,” Premier said.
Dominic Powell writes about the retail industry for the Sydney Morning Herald and The Age.