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Briscoe Group

By Dan Stratful

Thursday 7th June 2012

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Briscoe Group's (NZX: BGR ) shares have risen in recent weeks as dividend strippers move in to collect its special dividend which was declared shortly after its bumper first quarter (1Q) result.

BGR shares were already yielding a 10%pa gross income stream for shareholders before the announcement of a 10 cent per share (fully imputed) special dividend, which has boosted the income return further and provided a healthy capital gain for shareholders.

BGR shares have traditionally appealed to income investors as the company has an excellent track record of dividend payments and in the year ending 30 January 2012 (FY12) BGR paid out dividends equivalent to 77% of net profit (FY11: 88%).

BGR is conservatively run with a focus on dividend payments, and its balance sheet is in good shape with cash and bank balances at the close of FY12 of $95.3 million and no long term debt, which gave rise to the special dividend payment.

BGR reported a strong start to the financial year ending 30 January 2013 (FY13) with 1Q sales for the quarter ending 29 April 2012 of $102.5 million up 6.4% on the previous 1Q, and on a same store basis 1Q sales were 7.6% higher.

The Homeware stores reported a 5.7% increase in 1Q sales to $66 million, while Sporting Goods stores (Rebel Sport) increased their 1Q sales by 7.8% to $36.4 million. Despite a continuing competitive retailing environment BGR improved its gross margin percentage resulting in a 1Q profit ahead of last year.

The momentum of late last year has carried through into 2012 and BGR's margin performance is pleasing given the competitive price cutting environment among retailers.

BGR is trading cum-dividend and will likely fall around 10c on the ex-dividend date of 12 June 2012. Shareholders have had a stellar return and should continue to HOLD for the special dividend.

About Briscoe Group:
BGR operates the Briscoes, Rebel Sport, Living & Giving and Urban Loft retail stores with stores nationwide from Whangarei to Invercargill. BGR has closed 6 Living and Giving stores within the last year and all Christchurch based stores, due to an inconsistent trading performance and disruptions caused by earthquakes in the region.

Status:  HOLD

BGR's shares today traded at $1.83

For portfolio, sharemarket and fixed income enquires contact:
Dan Stratful at Investment Research Group (IRG)
Authorised Financial Adviser (AFA)
0800 437 8489, 09 304 0232, dan.stratful@irg.co.nz
**A disclosure statement is available, on request and free of charge.


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DISCLAIMER: To the extent that any of the content above constitutes advice, it is general advice that has been prepared without reference to investor’s objectives, financial situation or needs. Before acting on any advice, investors should consider the appropriateness of the advice and IRG recommend that investors should obtain appropriate financial, legal and taxation advice before making any financial investment decision. The report is based on information compiled from public information and private research. IRG have completed the report on a best endeavours basis and do not accept any liability of loss or damage. IRG suggest that clients use this as part of a decision making process and check key data before making any investment decisions.
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