Daily ShareChat: Briscoe Group

Briscoe Group expects continued difficult trading conditions in the current year but initiatives in the past year mean the company expects an improved financial performance, says McDouall Stuart.

Those initiatives include operational improvements such as better buying and its SAP system providing improved inventory control and financial data.

"The company has performed exceptionally in recent years with sales growth above industry trend and improved margins from operational improvements and marketing initiatives," it says.

The company, which owns the 41-store Briscoes homewares stores, the 32 Rebel Sport sporting goods stores and the 17 Living & Giving stores, is likely to continue to face difficult macroeconomic headwinds in the current year.

"Competition is likely to remain intense although the strengthening New Zealand dollar offers margin opportunities," it says.

The company has large cash deposits, $52 million at July 26, and the current economic environment may provide opportunities for acquisitions or store expansions with site availability.

McDouall Stuart is forecasting net profit will rise to $18.8 million in the year ending January 2010 compared with $11.6 million the previous year. For the year ending January 2011, it is forecasting a $19.8 million net profit.

It estimates the company has achieved 15% compound annual growth in net profit over the last five years and values the shares at $1.43.

BROKER CALL:  McDouall Stuart rate Briscoe Group (NZX: BGR ) as buy.

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