Briscoe Group shares spiked 11c yesterday to their highest level in 10 months after the retailer posted a lofty gain in half-year net profit.
Management warned, however, not to expect full-year profit to be so robust as it contends with intensely competitive retail conditions.
Shares closed the day at $1.44.
Managing director Rod Duke said he was "cautiously optimistic" about the annual forecast.
"While we are confident of further improvement to the bottom line, we don't expect the increase over last year for the second half to be as significant as that achieved for the first six months," he said.
After-tax profit for the first six months increased 51.1 per cent to $10.15 million.
The company will pay a 3c a share interim dividend on September 26.
This is the second time within the past 30 days that Briscoe shares have enjoyed a rally. Early last month, they jumped to a seven-month high of $1.34 on news of higher quarterly sales and the likelihood of a solid half-year result.
Duke said last year's first half was not hard to beat since it was a "particularly disappointing period" for the retailer.
The company has implemented marketing changes that it says are finally boosting its bottom line. The changes include Rebel Sport's sponsorship of Super 12 Rugby and the introduction of new brands.
Sales at its Homeware stores increased 10.7 per cent to $102.41 million. Rebel Sport sales were up 12.61 per cent to $51.97 million. The chains reported same-store sales increases of 6.49 per cent and 5.62 per cent respectively.
Fewer sales and less discounting coupled with improvements in shrinkage and stock levels helped boost margins.
Gross margins increased 33.2 per cent to 35.2 per cent.
Warren Doak, research analyst with Macquarie Research Equities, said the two basis point improvement in gross margin "exceeded expectations and was very, very solid".
Doak forecasts a 10 per cent to 15 per cent increase in Briscoe's annual net profit to between $23.5 million and $24 million.
The period's inventory levels were $48.37 million, a $2.12 million lift from the same time last year. The company attributed the rise to the five stores it opened in the past year and its improved stock management.
