Briscoe lifts first-half profit 4.8 per cent amid ongoing rivalry, unusual weather

Briscoe profit increased to $28.6 million in the 26 weeks ended July 30. Photo / Duncan Brown

Briscoe Group, which operates stores selling household items and sports goods, lifted first-half profit 4.8 per cent and said it was satisfied with the result in the face of ongoing competitiveness and unusual weather conditions.

Profit increased to $28.6 million, or 12.73 cents per share, in the 26 weeks ended July 30, from $27.3 million, or 12.21 cents, in the year earlier period, the Auckland-based company said in a statement. That's ahead of the retailer's forecast last month for a profit of $28 million. The result includes a $1.6 million dividend from its 19.8 per cent stake in outdoor retailer Kathmandu Holdings, up from $1.2 million a year earlier. Sales rose 4.4 per cent to $280.3 million.

Managing director Rod Duke, who owns more than three-quarters of the company, said the first half was impacted by a number of challenges including fires in Christchurch in February, a major flood in Edgecumbe in April, a relatively late start to winter across the country, warmer than average temperatures in Auckland and the central North Island over key promotional campaigns in June followed by intense cold, snow and heavy rain affecting many parts of the country during July.

The group's gross margin slipped to 41.03 per cent from 41.89 per cent while its inventory value increased 8.4 per cent to $85 million as more stock is held for online retail and it was left with higher than anticipated seasonal stock due to the unusual weather conditions.

"Despite the ongoing competitiveness of the retail environment and the impact on winter-dependent categories with the late start to the colder months, overall we are satisfied with the positive sales and profit growth achieved for this first six months," Duke said.

He said the economic outlook for the second half of the year "remains uncertain" with an imminent general election and stagnating house prices.

"We believe that consumers will be as controlled and discerning as ever in relation to discretionary spending," Duke said, adding the company remained optimistic and confident in its offering.

In the first half, earnings before interest and tax at the company's homeware unit dropped 0.7 per cent to $22.4 million while sales increased 4.6 per cent to $178 million. Meanwhile the sporting goods division lifted ebit 1.6 per cent to $14 million as sales advanced 4.2 per cent to $102.3 million.

Briscoe will pay a first-half dividend of 7.5 cents per share on Oct. 2, up from 7 cents a year earlier.

Its shares rose 1.4 per cent to $3.75, and have slipped 8.2 per cent this year.