How has Brexit Affected Premier Investment Shares?

What happened to the Premier Investments share price?

Premier Investments Limited [ASX:PMV] operates several specialty retail fashion chains in Australia, Singapore, New Zealand, and via a joint venture in South Africa. These brands include Jay Jays, Dotti, Portmans, Jacqui E, Peter Alexander and Just Jeans. In addition to this, they also own and operate the Smiggle stationary brand throughout Australia, New Zealand, Singapore and the UK.

At time of writing, shares of PMV were down 0.14%, to $14.33.

Why did PMV shares do this?

The Brexit vote has hit PMV shares hard.

PMV shares have fallen a long way from the all-time high of $17.63 on 24 March this year. While the stock had fallen from this high leading up to Brexit, the share price appeared to settle around $15.50.

Since the Brexit vote, PMV shares have fallen an incredible 6.16%.

PMV is heavily exposed to the UK market through Smiggle.

As per third quarter results, Smiggle accounts for 38% of PMV’s group valuation.

Five of the six fashion brands that PMV own are considered mature businesses which have reached maximum expansion in their respective marketplaces. The only specialty fashion retail brand with further local and international growth is Peter Alexander.

Furthermore, 20% of all PMV’s revenues come through Smiggle’s 42 stores in the UK.

What now for Premier Investments Limited?

Over the past two years, Premier Investments has rolled out Smiggle stores in Singapore, New Zealand and the UK. Over the next five years, PMV plans to have at least 200 Smiggle stores in the UK alone.

Brexit has hit the share price hard, trading as low as $14.01 in days after the Leave vote triumphed.

The share price has settled around $14.30 for now. However, PMV may choose to slow the Smiggle store UK rollout as it adjusts to the impact of the Brexit vote.

PMV has become a volatile stock since pushing past $10 per share in September 2014.

The volatility of this stock would suit short term traders.

However, the stock’s future growth relies heavily on international expansion. Any puttering in retail sales overseas — particularly in the UK — will hurt the company’s revenues.

Shae Russell

Since starting out in the financial markets over a decade ago, Shae has extensive experience across various aspects of the industry. Shae cut her teeth in the derivatives industry, teaching clients basic trading techniques with technical analysis.

Joining Fat Tail Investment Research eight years ago, Shae has worked across a number of publications, such as Australian Small-Cap Investigator, Gold Stock Trader and Microcap Trader. She’s spent the past two years however, honing her macro analysis skills alongside Jim Rickards, showing Australians how to invest and profit form global macro trends.

Drawing on her extensive experience, Shae is a contributor to Money Morning, and lead editor of sister-publication Markets & Money, where she looks at broad macro trends developing around the world, combining them with her distaste for central banks and irrational love of all things bullion.

Money Morning Australia