Daily ShareChat: Briscoe Group

Homewares and sports goods retailer Briscoe Group's 1.8% second quarter same-store sales increase was "very pleasing," given the continuing difficult retail environment, says Goldman Sachs JB Were analyst Buffy Gill.

A continuing improvement in gross profit margin in the second quarter will mean the first-half margin will be ahead of the first half last year and "marks a distinct reversal in the downward trend seen over the past four halves," Gill says.

The 1.7% rise in same-store sales from the homewares division was the first positive growth in six quarters.

The improvement is due to the benefits from revamped inventory management and IT systems implemented between July and September last year, she says.

"We believe the success of the new system will lead to sustainably higher gross margins in the long term" although a lower New Zealand dollar could put pressure on margins.

Gill has increased her net profit fore cast for the year ended January 2010 to $15 million from $10.4 million previously and compared with the previous year's $11.7 million result.

"We would look to turn more positive on the stock if we saw further scope for earnings upgrades."

These could come from greater than expected benefits from the inventory system or greater leverage to a consumer recovery.

BROKER CALL:  Goldman Sachs JB Were rate Briscoe's Group (NZX: BGR ) as hold.

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