Briscoe Group profits dipped marginally in the six months to July 26, dodging the Covid-19 hit most corporates experienced in their earnings. The group is eyeing opportunities around new revenue streams.
The homeware and sporting goods company posted an unaudited $27.9 million net profit after tax, down 1.3 per cent in the first-half of the 2020 financial year, compared to $28.3m in the previous corresponding period.
Its sales revenue dropped 3.5 per cent to $292.4m compared to $302.9m a year earlier.
The group received $11.5 million from the first round of Government wage subsidy which assisted the result and supported its ability to pay staff normal remuneration throughout Alert Levels 4 and 3.
The company, which operates Briscoes and Rebel Sports stores, will pay out an interim dividend for the period of 9 cents per share - up almost 6 per cent on the 8.5 cents per share it paid in the same period last year.
The group did not receive a dividend in the period from its investment in Kathmandu.
Briscoe Group managing director Rod Duke said pent up demand fuelled by lockdowns and the absence of New Zealanders not being able to travel could be attributed to strong sales in the period.
Duke told the Herald he had expected demand for homewares to be high for about three to four weeks and peter out but this had not occurred and sales were still strong into September.
Its first quarter sales decreased by more than 35 per cent, while its second quarter sales,
"assisted by the extraordinary increase in demand post-lockdown", rebounded, up 28.2 per cent ahead of the same period last year.
Online sales grew 99.8 per cent in the period, now accounting for 22.1 per cent of total group sales.
Duke said the group was "delighted" with the strong half-year result despite "the extraordinary upheavals experienced during this first six months".
"To achieve a profit so close to last year, with stores unable to open for 50 days of that time, is a great result," Duke said in the company's results presentation.
The dip in earnings in the period came from a 3.7 per cent decrease in homeware sales, and a 3 per cent decrease in sporting goods sales.
Despite this, its gross margin dollars closed the half-year ahead of last year.
This could partly be attributed to the move to its new online platform in December and the roll-out its click and collect capabilities before the first lockdown, Duke said.
Briscoe Group received $11.5m in wage subsidies and paid its staff regular remuneration during lockdown. It was only eligible for the first round of financial aid.
The company closed the period with a cash balance of $98.5m compared to $67.42m held at the beginning of the financial period.
"The steps taken by the group to protect the company and preserve liquidity have ensured our balance sheet has remained strong which is critically important in these uncertain and unpredictable times. The strong balance sheet gives us the flexibility to continue to protect the business as well as fund strategic initiatives to grow company profitability," Duke said.
August sales had kicked off strongly in the second-half, Duke said.
Briscoe calls in KPMG
The group has engaged the work of KPMG to look at ways it can enhance its shopping experience and review and redesign its supply chain.
The group would be able to add an additional 10 to 15 per cent to sales if it could guarantee stock availability 100 per cent of the time which is why it was looking to redesign its supply chain, Duke said.
It has also began work on a three-to-five year project that would enable it to develop new streams of revenue. What that entails and through what means has not be disclosed.
Duke was coy on what alternative streams of revenue the group was exploring, but said he remained open to acquiring retail offerings.
The group remains invested to growing in bricks and mortar retail footprint, which makes up approximately 85 per cent of the business, he said.
Briscoe Group also owns and operates single-store retailer Living & Giving.