Premier Investments Ltd (PMV)
Hi guys, I noticed PMV drop 13% Friday even as they announced a buyback. Can you give your thoughts on the reasoning and whether it represents an opportunity? Much appreciated.
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Answer
Hi Tony,
Over the last 1-2 years companies have often attempted to announce buybacks to placate investors after missing with earrings, downgrading or delivering poor forward guidance – it’s rarely worked!
In the case of retailer PMV, it announced a buyback of up to $100mn, over 1-year but the shares were clobbered the most since January because they missed earnings guidance and we aren’t operating in a forgiving market:
- PMV guided to 1H underlying EBIT of $120mn, well below consensus of $141m
The downgrade was driven by its Smiggle brand given poor trading conditions in the UK and weak brand performance in Australia – a concerning “one-two”. With interest rates at risk of rising in Australia next year we’re reticent to go bargain hunting with PMV especially because it’s stil not overly cheap.
