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Briscoe says first-half sales gains 4.3% as retail market faces growing pressures

Friday 3rd August 2018

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Briscoe Group lifted first-half sales 4.3 percent and will report a slightly higher profit on wider margins next month, shrugging off a growing number of hurdles facing the retail sector. 

Sales rose to $292.2 million in the six months ended July 29 from $280.3 million a year earlier, the Auckland-based retailer said in a statement. Of that, homeware sales rose 4.5 percent and its Rebel Sport chain revenue gained 3.8 percent, while online sales accounted for 9 percent of group sales. 

Managing director Rod Duke, who owns more than three-quarters of the company, said gross margin was higher than the 41.03 percent reported a year earlier, and profit was "marginally ahead" of the $28.6 million last year. The bottom line will take an extra hit from a higher tax bill because a dividend from its 19.9 percent stake in Kathmandu Holdings wasn't imputed for New Zealand investors. 

"New Zealand retailing remains highly competitive and retailers' profit margins continue to be tested by declining consumer confidence, record-high fuel costs and increased wage pressures," Duke said in a statement. "Despite these headwinds, our profit continues to track marginally ahead of last year and we anticipate this being reflected in an increased half-year profit announcement." It expects to make that announcement on Sept. 20. 

Government figures showed flat retail sales in the March quarter due largely to a reduction in clothing and footwear, although more recent surveys of credit and debit card transactions showed a pick up in June. Consumer confidence surveys have dropped back to their long-run average after an extended period of optimism and haven't captured the impacts of a regional fuel tax in Auckland or the government's targeted assistance programmes. 

Other retailers such as Warehouse have struggled to compete with the emergence of cheaper international goods sourced from overseas, but plans to enforce GST on low-value goods from next year is seen as supporting the local sector, and the recent hike in the minimum wage will fall largely on the retail and hospitality industries, which tend to have lower wages than other sectors. 

Briscoe shares gained 0.3 percent to $3.56 and have increased 2.9 percent so far this year. It's the biggest listed retailer on the NZX. 


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