In what is the latest in a string of downbeat results from the discretionary retail sector, the company behind retail chains including Just Jeans and Portmans yesterday reported a 2.4 per cent fall in first-half net profit and warned that full-year earnings would be at the low end of previous guidance.
"I really believe the Reserve Bank has mishandled the mining boom to the great detriment of the non-mining sector and particularly retail, which is one of the key drivers of economic activity," Mr Lew said after the result was announced to the market.
"I'd be calling on the Reserve Bank to cut interest rates by 50 to 75 basis points at the next meeting. I think the Australian economy's in trouble."
The RBA has left interest rates on hold since December, when the official cash rate was lowered to 4.25 per cent. The board next meets on April 3.
Mr Lew, then chairman of Coles Myer, was a member of the RBA board from 1992 to 1997 -- a term that overlapped those of David Jones's then chairman Dick Warburton and Westfield chairman Frank Lowy.
"I'm not sure they have that market knowledge today . . . I have a view that they're not in touch with the market, they don't understand where the economy's at, at the moment," Mr Lew said.
The RBA's only current member with experience in the retail sector is former Woolworths chief executive Roger Corbett.
A spokesman for Wayne Swan, who controls non-executive appointments to the RBA board, rejected the criticism of the current members' credentials.
"The government believes the current composition of the RBA board provides an appropriate range of experience, knowledge and perspectives from across the economy," the Treasurer's spokesman said.
He declined to comment on Mr Lew's call for interest rate cuts, saying they were a matter for the independent central bank.
Premier yesterday reported a net profit of $38.5 million after tax for the 26 weeks to January 28, compared with $39.4m in the previous comparable period -- a result Mr Lew described as credible at a time when other retailers are reporting double-digit falls in earnings.
Revenue was down by 5.8 per cent, to $448.7m, with sales from the retail division, known as Just Group, down by 7.1 per cent when the impact of store openings and closures was stripped out.
The Jay Jays, Jacqui E, Dotti, Portmans and Just Jeans chains all reported a downturn in sales, but sleepwear chain Peter Alexander and stationery division Smiggle were both higher in the period.
The company reaffirmed guidance for its retail businesses to deliver full-year earnings before interest and tax of between $80m and $95m, up from underlying EBIT of $65.3m in the previous financial year.
However, the company warned that the result was expected to be at the bottom of the forecast range, and would require an improvement in fourth-quarter trading relative to the same period last financial year -- a hurdle chief executive Mark McInnes said he expected to achieve given the sharp downturn in the previous fourth quarter.
Mr McInnes said the macroeconomic environment remained tough for retailers, citing weak consumer spending, increased competition and rising rental and labour costs. "These challenges will only continue to test the structure of the retail industry in Australia," he said.
Mr McInnes said strategies to restore the company to earnings growth included an expanded online offering as the company sought to derive 10 per cent of total sales from the online channel by 2015 -- a target Mr McInnes described as "aspirational".
The company declared a fully franked interim dividend of 18c per share, unchanged from the previous first half and payable on May 18. Premier shares closed 25c higher at $5.35.
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