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Briscoes increases aggression to keep market share

Friday 10th September 2010

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Retailer Briscoes boosted its first-half profit 1.8% but warns it’s facing tighter margins through the rest of 2010 as it looks to shore up its market share.

Net profit rose to $6.6 million, or 3.13 cents a share, in the six months ended August 1 from $6.5 million, or 3.07 cents a share, a year earlier, after a softer second quarter forced it to cut margins to keep customers.

Sales rose 2.6% to $190.1 million, while operating profit surged 42% to $12.9 million. The bottom-line figure included a $2.64 million non-cash tax adjustment after the government removed depreciation claims from buildings.

“We have increased the aggression of our promotions which has predictably resulted in some margin erosion, but delivered a sales increase over last year,” managing director Rod Duke said. “We believe we will need to continue with the same level of aggression for the remainder of the year.”

Retailers have been doing it tough over the past couple of years as the worst recession in 18 years, combined with a crackdown on easy credit, sapped consumers’ ability to spend, and encouraged households to pay down debt.

Duke said he is “cautiously optimistic” about the company’s second-half performance, though the uncertainty of the environment made it too difficult to predict a result.

“We believe we will see further uncertainty in consumer confidence which will result in continued difficult trading conditions for retailers,” he said.

The retailer declared a fully imputed interim dividend of 3 cents a share.

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