Solly wants a rate cut for Christmas If Solomon Lew is any guide to how business confidence is tracking since the federal election, then things might be looking up. He says his Premier Investments is ready to spend but wants to see signs that consumer confidence is improving. And that, he says, requires another rate cut before Christmas. Lew is happy to apply plenty of public pressure to Reserve Bank boss Glenn Stevens, whose management of monetary policy the billionaire believes will decide whether retailers have a good Christmas. Tony Abbott can certainly expect to see the Solomon Lew-led lobby on his doorstep with a renewed push to have a goods and services tax applied to overseas online purchases. Just to be clear, this is what other retail bosses are also thinking but are less inclined to publicly articulate. Lew's Premier Investments has just experienced a particularly difficult sales quarter - an outcome that has a lot to do with Australia having the warmest winter in 100 years and, according to Lew, consumers who were sick of seeing politicians bickering on the front pages. But he can't tell whether the lift in sales that Premier's brands have experienced over the past week is because consumers are buying summer clothes early or they are happy to see a new government. Lew reckons the incoming Coalition government understands it has to get business behind it and Tony Abbott is sympathetic to policy that creates jobs. Lew is scathing of the Labor government's economic management over the past five years, blaming it for the 80,000 jobs lost in the discretionary retail industry during that period. The government may not have helped the industry (other than a couple of hefty stimulus payments that Lew didn't mention) but the different result achieved from Premier's brands is textbook evidence that consumers will spend if the product is appealing, despite overall confidence levels. There are a couple of innovative chains in the Premier portfolio, like stationery group Smiggle and sleepwear chain Peter Alexander, which have defied the retail malaise. Smiggle's sales moved up 14.5 per cent with a net 19 new stores opened across Australia, Singapore and New Zealand. Peter Alexander opened 11 new stores and sales grew 17.7 per cent. Neither of these markets are crowded by too many look-alike chains. The product is fresh and exportable. Until now Smiggle's offshore foray has been focused in Singapore but is now set to colonise Britain, where the availability of cheap sites and the absence of much by way of competition makes it a particularly attractive ($2.4 billion) personal stationery market. The plan is to plant up to 200 stores, making it a potentially bigger operation than it is in Australia. The growth plans for Peter Alexander have also been placed on steroids, with a goal to grow the business by 40 to 50 per cent over the next three years. Without them Premier Retail would have slotted in to the mix of Australian apparel businesses struggling in an environment of soft sales, which on a like-for-like basis fell 1.8 per cent. The two biggest and most mature brands, Jay Jays and Just Jeans had particularly weak sales; JacquiE was down 2.3 per cent. The challenge for Premier boss Mark McInnes is tackling the cost side of the business and is focusing on cutting rental costs. He tells a story of threatening a landlord that a store would be closed unless a better rent deal could be negotiated. The landlord called the bluff so the store was closed. Within a few weeks the landlord offered to halve the rent and throw in $250,000 in incentives to reopen. Over the past year McInnes has closed 29 stores and says there will be more to come. Established store rents fell by 2.4 per cent, while store wages in established brands grew 0.5 per cent. Citi analyst Craig Woolford warns that the all-important management of inventory rose by 18 per cent against a sales rise of 1 per cent. The story of Australian retailing for the past few years has been littered with instances where excess inventory has resulted in either large scale write-downs or excessive discounting, or both. Target was the most recent culprit. These events can have a ripple effect on competitors who need to match discounts and plays havoc with gross margins. On the positive side, like many other bricks and mortar retailers, Premier's online operations are gaining traction. But like most online channels the improvements are off a relatively low base. What Premier and other retailers are praying for is a good Christmas - it will determine whether they can grow profit in 2013-14. Myer has already warned it won't return to profit growth until 2014-15, and expects a fall for the fourth consecutive year in 2013-14. Lew has cautioned that conditions are still tough but is hopeful of a happy Christmas.