Briscoe Group says outlook uncertain

Tuesday 17th September 2019

Briscoe Group said first-half profit was flat and the economic outlook for the second half remains uncertain given subdued business and consumer confidence, increased cost pressures and the lower New Zealand dollar.

“All of which will make it difficult for retailers to maintain margins,” said managing director Rod Duke.

Briscoe Group’s gross profit margin was 40.65 percent in the 26 weeks to July 28 versus 40.93 percent in the prior first-half.

The decrease in gross margin percentage reflects the continued intensity of competition across the retailing environment, said Duke. Trading patterns for seasonal product, particularly in homewares, were impacted by the very late start to winter.

As a result, the successful winter clearance programme, which closed out trading for the first half, boosted sales but did come at the expense of gross profit percentage.

Earlier today, the latest Westpac McDermott Miller survey showed consumer confidence index fell to its lowest level since 2012. The index was down 0.4 of a point to 103.1 in the September quarter, below the long-run average of 111.1. Business confidence also remains in the doldrums.

The homewares and sporting goods retailer said net profit was $28.27 million in the 26 weeks, down 3.6 percent after including a previously signalled $1.14 million adjustment as a result of the way leases are treated under new accounting standards.

Due to its January balance date, Briscoe Group is one of the first companies to adopt the new leasing standard which will significantly impact all businesses with sizable portfolios of leased properties, said managing director Rod Duke.

As previously reported, revenue lifted 3.3 percent to $302.98 million in the six months while same store sales were up 2.7 percent.

Homeware sales increased 2.57 percent to $191.50 million and sporting goods sales increased 4.68 percent to $111.48 million.

Briscoe will pay an interim dividend of 8.5 cents per share, up from 8 cents in the prior year, to shareholders on the register at Oct. 1. It will be paid on Oct. 8.

The shares fell 0.8 percent to $3.69 trimming their gain so far this year to 10 percent.

(BusinessDesk)

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