Briscoe picks 10pc profit rise

Rod Duke says Briscoe Group is targetting another 10 per cent rise in profit for the coming year. Photo / Paul Estcourt

Briscoe Group says it expects profits for the past year to be 10 per cent up on a year earlier.

Sales by Briscoe Group for the year to the end of January were up 2.4 per cent from a year earlier, on a same-store, same-day basis.

Excluding a one-off tax adjustment it would report a full-year tax-paid profit of more than $23 million. Managing director Rod Duke said the company had set targets of a further 10 per cent lift in profit and sales for the coming year.

"It's a half-decent target to be looking at, especially when those around you are falling over."

The company, which owns Briscoes and Living & Giving homeware stores and Rebel Sport, will report its final full-year audited result on March 8.

Duke said the pleasing performance was spread throughout the group in a tough retail environment that showed few signs of improving.

"I think it's going to be just as difficult, I can see no silver bullet. It's going to be just as tough in the year ahead as in the year just past."

Shares closed steady at $1.36 yesterday.

Briscoe had discounted more aggressively than normal but maintained margins by renegotiating supply agreements and containing internal costs. The relatively strong New Zealand dollar had also helped make imports cheaper.

"We went back to suppliers and negotiated a whole raft of changes to trading terms and we were lucky enough to have the dollar at half-decent levels which meant imports came through in half-decent shape which gave us the ammunition to realign a lot of our prices and promote aggressively."

The Briscoe result contrasts with a profit warning issued last month by competitor The Warehouse, which was forced to cut its profit forecast for the six months to January 31 after poor sales over Christmas and New Year.

Retail analyst Tim Morris, managing director of Coriolis Research, said the Briscoe result was a good one.

"Any positive result is well done in the current environment, especially relative to The Warehouse. Briscoes has always had a very consistent strategy. It's mid to upmarket with brands at the best prices.

"I guess that's from the ownership and management."

Both the two big listed New Zealand retailers were performing reasonably compared with others including Australian-owned retailers here. "A lot of them are struggling - either of them compared with the average are probably quite good."

Duke said he would "ginger up" the range and brands in his stores this year.

Briscoe Group's tax adjustment was a one-off deferred-tax liability of $2.6 million as a result of changes to building depreciation.

The figure was expected to adjust back to around $2.4 million and would be booked against tax expense for the year.

The group reported sales for the latest 52-week period of $419.3 million. That was 0.6 per cent up on the $416.7 million for a 53-week period last year.

The company operates a weekly trading and reporting cycle, meaning that every six years it has a 53-week period.

On a same-store basis, and adjusted for the additional week last year, homeware sales increased 2 per cent compared with the previous period, while sporting goods sales were up 3.3 per cent.

Group sales for the 13 weeks to the end of January were $139.4 million, 5.2 per cent lower than in the 14-week fourth quarter of the previous year.

Total group store numbers fell by two to 86 from 88 during the quarter with the closure of Living & Giving stores in Takapuna and Hamilton, after the expiry of the leases. Duke said he was on the lookout for a number of new sites, including Rebel Sport sites in Auckland.

SALES SUCCESS
* $419.3m Briscoe sales for year to January 31, up 2.4 per cent on same-store basis
* $23m expected full-year profit, up 10 per cent