Sales jump but lower half-year net profit expected for Briscoe

Briscoe Group managing director Rod Duke. Photo / Dean Purcell

Briscoe Group’s sales edged higher in its first half – surprising the group’s own managing director – but net profit is still expected to be several million lower than last year.

The homeware and sporting goods retailer announced $369.2 million in half-year unaudited sales to the market on Wednesday, 0.35 per cent higher than the $367.9m during the previous corresponding period.

Briscoe said net profit after tax for the 26 weeks to July 30 would be “in excess” of $42m – a drop from the $45.6m in net profit Briscoe saw during the same period in 2022.

The retail giant’s profit margin percentage for the first half will also be around 200 basis points below last year.

Briscoe’s MD Rod Duke said gross margin remained a “major focus”, and Briscoe didn’t expect the same basis point decline in the second half.

“Our goal for the full year remains to be able to show that the group can protect around half of the 633 basis gross profit margin points gained during the two years ended January 2021 and January 2022,” he said.

“When I sat down and signed off the budgets a year ago for this, I didn’t quite expect that number,” Duke told BusinessDesk.

“The market, and to be fair, probably we did as well - we weren’t that sure that we’d be able to get record sales in the first half. That’s a world record for us.”

The group’s sporting goods segment, Rebel Sport, increased by 0.46 per cent, while its homeware segment increased sales by 0.28 per cent.

“It’s encouraging to see a return to physical stores, with the group’s bricks and mortar sales showing higher growth than online sales for the half,” Duke said.

Briscoe Group opened a new Rebel Sport store in Ashburton in April, which coincided with the relocation of the existing Briscoes Homeware store.

Crime and clowns

Negative economic factors have bruised consumer confidence and spending so far this year, which Duke nodded to in the group’s release to the market.

“The retail environment continues to be difficult and unpredictable to navigate from an economic perspective, and the widely reported explosion in retail crime continues to have a significant operational as well as economic impact,” he said.

He told BusinessDesk that Briscoe would continue to “top up” its investment into retail crime prevention later this year.

The group had announced at its annual meeting back in May that it was spending an additional $1m on security across its stores.

“But I think it’s over to the authorities, over to the Government and the police to start investing in more police when these clowns get caught.”

Eating the competition’s lunch?

Duke said he’d had a number of calls from analysts and market watchers who considered Briscoe to be eating up other retailers’ market share.

“If your numbers are up and the vast majority of other retailers, like retailers are down, then it’s clear that you’ve got market share gains,” he told BusinessDesk.

“I don’t think it’s going to be any easier in the second half as it was in the first half. Could it be worse? I think it largely depends.”

Food inflation, higher housing interest rates and concerns about retail crime were not “going away anytime soon” – the only variable would be the upcoming election.

Briscoe Group will release its half-year results on September 13. The company’s shares were up 1.7 per cent to $4.72 by early afternoon on Wednesday.