Briscoe Group, whose shares have grown four times faster than the NZX 50 Index in the past five years, is eager to make acquisitions or substantial investments using a cash pile that may have grown to $90 million by January 2014.
Managing director Rod Duke, who owns 78 per cent of the listed retailer, said by the end the financial year, the company was likely to have built cash reserves to between $80 million and $90 million, from $78 million in the bank at the end of last year. It has no debt.
That amount of cash could potentially fund an acquisition of up to $200 million, he told BusinessDesk.
"We're very eager to make some substantial investments in existing or new businesses," he said. "We're sitting there keeping our powder dry. It has got to be accretive. For the amount of dollars I have got into this, I've got to get a fair return."
The retailer hasn't made any acquisitions since 2006, when it acquired the Living & Giving chain from Pacific Retail Group. It passed on the opportunity to buy the Noel Leeming Group from buyout firm Gresham Private Equity and that appliance chain was acquired last year for $65 million by Warehouse Group.
The company returned $21 million to shareholders via a special dividend last year while saying its preferred use of capital was for "acquisition and expansion opportunities."
The shares gained 0.9 per cent to $2.38 on the NZX today. The stock has gained 139 per cent in the past five years. In that time, annual profit has tripled, which Duke put down to a strong focus on customers including regular use of surveying and a long-serving, "absolute gun" team beneath him.
"You have got to understand what they like about you, what they dislike about you and what they like and dislike about your competitors," he said.
Yesterday, the homeware and sporting goods retail chain said profit in the six months ended July 28 rose at least 9.7 per cent to $14.6 million thanks to growth in second-quarter sales and wider margins across both its segments.
Duke said he has no plans to sell down his controlling stake, a move that could potentially propel Briscoe into the NZX 50.