Briscoe Group posts record profit

Kiwi retailer Briscoe Group shines in challenging market. Photo/Ross Setford

Kiwi retailer Briscoe Group has posted a record full year profit in an industry chief executive Rod Duke says is challenging.

The company which owns Briscoes, Rebel Sport, and Living and Giving posted a net profit after tax of $59.42 million for the year ended January, a 26.06 per cent increase on the $47.14m from the previous year.

"We are pleased to announce another record profit for Briscoe Group in a market that has been challenging for many retailers," Duke said.

"The focus we place on managing and improving our retail brands underpins our strong profit growth of recent years as we continually drive to improve the way we do things in every area of the business."

Duke said the result was an increase of 77 per cent on the result from three years ago at an annual growth rate of 21 per cent for the same period.

The earnings were generated on sales revenue of $582.84m, an increase of 5.42 per cent on the $552.89m reported in the previous year.

The Group's gross profit margin for the year increased from 40.49 per cent to 41.07 per cent, reflecting the continued focus the Group has on inventory and promotion management.

The company would pay a final dividend of 11c per share.

"It is clear that the New Zealand retailing environment remains challenging with a number of retailers struggling for growth," Duke said.

"But we remain cautiously optimistic about the year ahead for Briscoe Group."

Rival Warehouse Group, now eclipsed by Briscoe's market capitalisation, last week reported a 76 per cent slump in first-half profit as it booked an impairment charge against its financial services unit, faced restructuring costs, and saw gross margins shrink 70 basis points to 32.2 per cent across its group.

Briscoe shares, of which Duke owns more than three-quarters, last traded at $4.39 and have gained 8.9 per cent so far this year. That values Briscoe at $963.7m, compared to $863.6m for Warehouse, which was recently up 0.4 per cent to $2.49.

Briscoe's bottom line was also bolstered by $4.4m in dividends from its 19.9 per cent stake in outdoor equipment chain Kathmandu. Duke said he's watching "Kathmandu's performance closely as they seek to restore historical levels of profitability."

Kathmandu's board rebuffed a Briscoe takeover offer in 2015, offering five of its own shares for every nine Kathmandu shares plus 20 cents cash, which at the time was an implied offer of $1.80 a share. Kathmandu's shares were recently up 1.6 per cent to $1.94, and Briscoe valued the stake at $76.6m at the January 29 balance date, up from $60.9m a year earlier.

Briscoe increased online sales by more than 40 per cent, and they accounted for 6 per cent of the retailer's $582.8m in revenue.

- With Businessdesk