Investors seek a better buy with Briscoe as sales disappoint

Friday 14th May 2004

If Briscoe Group had a slot on the monopoly board it might as well say: "Return to the start."

After a dream run in 2002 the shares are now trading back where they started, as investors continue to back-pedal away from the retail sector.

The company has moved strategically to protect its margins, which had an immediate negative impact on short-term sales, managing director Rod Duke said last week.

However, the sales performances from both its divisions were disappointing in the first quarter to April 30.

Rebel Sport, whose same-store sales were down 18%, continues to struggle despite a new store opening in Rotorua, while Briscoe's Homeware same-store sales were down nearly 5%.

Analysts say investor interest has disappeared from the sector and it is a case of "time will tell."

The question now is whether the new emphasis on protecting margins and improving the company's brand image pays off.

Duke said although the increase in margins had occurred faster than expected, the drop in first-quarter profit was unlikely to be made up in the second quarter.

Although the economy is still relatively buoyant, interest rates are expected to rise again. National retail sales grew in February, but the underlying trend suggests the pace is slowing.

According to Statistics New Zealand, sales were 1.6% lower in February than in the previous month.

Briscoe has also benefited from the higher New Zealand dollar but the currency market has since depreciated.

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