Briscoes hikes dividend, reports higher interim profit

Photo / Bay of Plenty Times

Briscoe Group is increasing its interim dividend after reporting a 41.85 per cent rise in earnings before interest and tax (EBIT) as the company ramped up sales promotions and cut costs in a difficult trading environment.

The operator of Briscoes, Living & Giving, Urban Loft and Rebel Sports stores said net profit after tax, but excluding a one-off deferred tax adjustment, rose 42.31 per cent to $9.28 million in the six months to August 1 from the same period last year.

The company is paying an interim dividend of three cents a share on October 1, up from two cents a share last year.

Most retailers would be thrilled with that result in what continues to be a tough retailing environment, said Managing Director Rod Duke. Cost control was an important focus in times like these, he said.

The company was cautiously optimistic about the second half of the year but the uncertainty of the economic environment made it difficult to accurately predict a result for the period.

"We believe we will see further uncertainty in consumer confidence which will result in continued difficult trading conditions for retailers," he said.

Net profit after tax of $6.64m compared to $6.52m last year and is in line with the advice given to the market on August 6. This figure includes a tax adjustment of $2.64m for government tax changes, which is a one-off non-cash accounting entry.

The group also booked an impairment adjustment of $828,000 for under-performing specialty stores. Adjusting for this EBIT rose 30 per cent.

The company's gross margin percentage decreased slightly from 40.34 per cent to 39.94 per cent, reflecting the impact of the later than normal start to winter and the continued competitiveness and tightening across the retail industry in general.

Aggression in promotions predictably resulted in some margin erosion but delivered a sales increase over last year of 2.61 per cent. The company would need to continue the same level of aggression in promotions for the remainder of the year, Duke said.

"Customer confidence continues to be adversely affected by factors including; increasing unemployment, higher power prices, falling house sales, the introduction of the Emissions Trading Scheme and uncertainty over the net effect of the goods and services tax rate increase and personal tax cuts.

"Poor economic news from overseas also continues to erode consumer confidence in New Zealand and consumers have responded by paying down debt and only spending when true needs arise or when deals on offer are too good to miss," he said.

Inventory levels at August 1 were $68.65m compared to $64.89m at the same time last year. The increase of $3.76m reflects the earlier landing of product directly imported by the group and also some additional stock levels due to the sales slow-down.

- NZPA