The Premier Investments Limited (ASX: PMV) share price is pushing higher on Tuesday after releasing a business update.

At the time of writing the retail conglomerate’s shares are up 2.5% to $15.83.

What was in Premier Investments’ update?

This morning Premier Investments advised that in line with step one of the Government’s plan to reopen Australia, Premier Investments will be opening the balance of its stores in Australia from Friday May 15. This follows the reopening of its Queensland and Northern Territory stores late last week.

Outside Australia, in New Zealand the company plans to reopen its stores on May 14, whereas its UK and Asia stores will remain closed until at least June 1.

Sales update.

These store openings are good news for the company as their closures had caused a significant decline in global sales.

According to the release, Premier Investments’ total sales for the six weeks to May 6 were down 74% on the prior corresponding period.

It would have been much worse had the company not made its high level of investment in online technology over the last decade.

This strong online capability has supported strong online sales growth during the pandemic. Since the beginning of the temporary store closures, Premier Investments’ online sales have surged by 99%.

The Peter Alexander brand has been a real standout. It has experienced a 295% increase in online sales over the period.

But perhaps most impressive was that during the week ended May 2, Peter Alexander Australia’s online sales alone were up 18% on the total sales across both online and its entire 122 store and concession network in Australia during the prior corresponding period.

Balance sheet strength.

Premier Investments remains in a strong financial position and looks set to comfortably ride out the storm.

As at May 1, the company’s consolidated cash position was $256.2 million. It also maintains access to undrawn facilities of $91.8 million. Management believes this leaves it well placed to begin its recovery, including progressively bringing back its workforce to reopen.

Though it has warned that there could still be tough times ahead.

It commented: “No one can reliably predict the pace and timing of the upcoming phase of economic recovery. In this recovery period, Premier Retail’s sales and margin by store, by country, by brand and by region are highly uncertain and will be dictated predominately by the manner in which consumers respond to the return of instore shopping in their local communities, bound by strict social distancing rules and health guidelines.”

In light of this, it has no plans to provide guidance for FY 2020 at this stage.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Premier Investments share price higher after announcing store reopenings and online sales surge appeared first on Motley Fool Australia.

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Australia’s leading online automotive classifieds website Carsales.Com Ltd (ASX: CAR) has seen a partial rebound in its share price since late March, but is still down 26% since mid-February.

Does this now provide investors with a good buying opportunity?

Sharp downturn in sales volumes

Social distancing and isolation measures implemented to combat the coronavirus pandemic has unsurprisingly translated to a reduction in buying and selling activity for Carsales. Therefore, this has impacted classifieds listing sales volumes and revenues.

In a recent trading update in late April, Carsales revealed that between 10 March 2020 and 21 April 2020, seller and dealer used car lead volumes were down very sharply by approximately 25% compared to normal levels. 

However, on a positive note, traffic on carsales.com.au had remained resilient over the prior month, and private seller and dealer used car lead volumes were growing solidly.

Well-positioned to ride out the crisis

Despite the enormous challenged posed by the crisis, Carsales appears to be taking all the necessary steps to mitigate the negative impact of the coronavirus pandemic on its operations. This includes the initiation of cost-saving measures such as reducing board executive remuneration, temporarily standing down around 250 employees and reducing outdoor brand marketing.

Also, Carsales’ debt and liquidity positions appear to be reasonably solid, considering the unprecedented challenges that the automotive industry is currently facing. At the end of March, Carsales had a relatively manageable net debt position of $355 million and a relatively strong liquidity position with around $190 million in available cash.

Is the Carsales share price a buy?

Despite the current market downturn, I believe that Carsales does offer investors a good long-term buying opportunity. That said, more share price volatility could still be around in the months ahead.

It is important to take into consideration that the automotive sector is highly impacted by economic cycles, but has always proven to be fairly resilient. Whilst it can suffer sharp downward swings in very challenging times, such as the one we are in now, it typically bounces back fairly quickly once market conditions improve.

Already there are signs that market conditions for Carsales may improve in the not too distant future. With the release of the Federal Government’s 3-step plan to reopen Australia by late July, this is likely to provide a welcome boost to new car sales in the months ahead, which could translate to a further uplift in the Carsales share price.

I also believe that Carsales’ industry leadership position in the Australian market, along with its geographic diversification, positions it well to outperform the S&P/ASX 200 Index (ASX: XJO) over the longer term. In particular, the international growth potential for Carsales appears to remain strong, especially in the fast-growing South Korean market.

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• In a post-COVID world, could Australia be the next superpower?
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Phil Harpur owns shares of carsales.com Limited. The Motley Fool Australia has recommended carsales.com Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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