The company behind major Australian retailers including Just Jeans, Peter Alexander, Jay Jays and Smiggle is threatening to pull every store from shopping centres where fast-fashion rivals are being offered cut-rate rents.
Billionaire Solomon Lew's retail group, Premier Investments, on Friday issued the stern warning of widespread store closures if landlords did not start providing the company with similar deals, which included capital incentives and cheaper rents by up to two-thirds.
Premier retail chief executive Mark McInnes said it was aware of landlords offering the better deals to local and international brands including H&M, Forever New and Specialty Fashion Group.
"Unless those same landlords offer us the same rent and capital, then we will escalate the closure of all our brands in that centre, and in the landlord's future development pipeline," Mr McInnes said.
"Given [we] are their largest partner, we expect to be treated as their largest partner and to be treated the same as other companies."
Mr McInnes said that, in the past five years, Premier had opened 260 highly profitable Smiggle and Peter Alexander stores globally, but had shut down more than 80 stores in the same period because "landlords have failed to provide market rents in a changing industry".
Premier said "some landlords", including Stockland and Vicinity, understood the value of the Premier portfolio in their developments. But "unrealistic" rents at others shopping centres had forced the closure of their stores, including two stores at Melbourne's Bourke Street Mall - a Just Jeans and a Portmans - in the past six months.
"We sought, and we continue to seek, rents in line with centre performance," the company said.
"As we have said before, where landlords do not continue to invest in overall shopping experiences and/or adjust their rent expectations in line with the performance of their own centres and the major shift in consumer behaviour, further store closures will be necessary."
Despite the rent pressure, Premier, Myer's largest shareholder, on Friday reported its overall net profit had jumped nearly 10 per cent to $78.6 million in the six months to January 27, from revenue of $634 million, up 7 per cent.
Premier's stand-out brands were stationery chain Smiggle and pyjamas chain Peter Alexander, which helped offset the weaker performance of the mid-market apparel brands in the group.
Smiggle, with 332 stores spanning Australia, New Zealand, Asia, the UK and Ireland, recorded a 26 per cent increase in sales to $170 million for the half, and opened 35 new stores globally. Premier said Smiggle was set to open its global flagship store on London's Oxford Street in May and a store in the Netherlands in early 2019.
Unless those same landlords offer us the same rent and capital, then we will escalate the closure of all our brands in that centre.
Mark McInnes
Peter Alexander's sales were up 15 per cent for the half-year, to $114 million, and the company opened 12 new stores, Premier said.
Mr McInnes, said the company had heavily invested in the "unique brands" of Smiggle and Peter Alexander.
"We identified in 2011 that Smiggle and Peter Alexander were unique brands with personalities driven by in-house design, research and innovation," he said. "We set out to invest in these businesses and grow them aggressively."
Sales slumped 3.6 per cent at Just Jeans, but Premier said the brand maintained a strong market position and sales were beginning to bounce back. The company said it was "extremely disappointed" in the performance of Dotti and believed it could do "much better".
Morning & Afternoon Newsletter
Delivered Mon–Fri.