Premier Investments, a fashion retailer, is also a well-known company that has a profitable online business.
Premier Investments, which owns Just Jeans and Smiggle, has a low cost and profitable online business model.
The profitability of Premier’s online business is significantly higher than that of other retailers in Australia due to the company’s structure and low-cost distribution model.
Unlike other retailers, Premier does not pay retail rents for its distribution center. Its brands are not bought anywhere else.
Premier’s EBIT margin has doubled since 2015, largely due to the increasing profitability of its online business.
Peter Alexander has been a great beneficiary of Premier’s low-cost and profitable online business model. Due to the presence of few competitors, the company has been able to expand its gross margin over the years.
Premier has also been able to control the in-store costs by negotiating rent deals. As sales shifted online, the company was able to lower its in-store labor costs.
Raymond noted that the key to maintaining Premier’s profitability is to continue reducing its rents. He noted that this strategy could lead to an increase in sales as the company’s lockups ease.
Despite the current environment, Raymond believes that Premier is well-equipped to handle the challenges that it faces.
Raymond noted that Premier is one of the toughest retailers to deal with due to its large number of stores and its willingness to walk away from its leases.
While Premier’s valuation is higher than that of other retailers, Raymond believes that it does not look as stretched as other companies.
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