Good sales pump up Briscoe shares, room to rise further

By NZPA

Monday 3rd February 2003

Shares in retailer Briscoe Group, owner of the Briscoes Homeware and Rebel Sport chains, are likely to keep rising this year following an increase in fourth quarter sales.

Unaudited sales figures released today showed a 17 percent rise in Briscoes' sales for the December quarter, provoking an 8c rise in the share price this morning. The shares closed up 5c at $2.75.

"There was a lot of anticipation built into the share price, but they still managed to slightly exceed what the market was anticipating," Paul Savory of JB Were said.

Sales at Rebel stores were up 19 percent at $30.7 million, while Briscoes Homeware's sales increased 17 percent to $72.4 million.

Fellow retailer The Warehouse is expected to unveil "solid" second quarter sales growth on Wednesday, up roughly 12 percent, Mr Savory said.

In the same quarter the previous year The Warehouse posted a 12.9 percent increase in sales to $624 million.

"The only thing is, Australian sales will be reduced in New Zealand dollar terms.

"There was very strong domestic demand, and you'd anticipate the blue sheds (Warehouse Stationery) to have had good numbers, they've got more footage (space) as well this year."

However, private consumption in New Zealand was likely to moderate, with forecast 2.2 percent growth this year down from last year's 3.5 percent rise, according to Deutsche Bank economists.

Briscoes rings up about 30 percent of total sales during the December quarter, including the widely anticipated post-Christmas sales.

"Looking forward, (Briscoes') profit is going to be boosted by the rising New Zealand dollar so margins are going to be a little bit better than people anticipate," Mr Savory said.

Unlike The Warehouse, Briscoes does not hedge its foreign exchange needs but it has "done particularly well out of not hedging at this stage", Mr Savory said.

Since Briscoes listed in December 2001, the New Zealand dollar has gained 31 percent against the United States dollar, and 15 percent against the aussie.

Briscoes was the top performing stock on the top-40 index last year, and is trading about 10 percent above JB Were's current $2.49 valuation on its share price.

The company, which has a market capitalisation of about $577.5 million, said it was on track to post a "satisfactory increase in profits for the full year".

"It's only been listed just over one year, and we anticipate the profit which comes out in March to be $27 million, so that will further underpin the share price," Mr Savory said.

Expectations were high when Briscoe shares listed in December 2001 at $1.40, a 40 percent premium to their $1 issue price.

"You could quite conceivably see it push that $3 mark in the short term, especially on the back of a good March result.

"The retail sector's been outstanding, but ... that dollar rising has been an absolute windfall for retail, especially Briscoe because they're not hedged," he said.

Forsyth Barr Frater Williams analyst Jeremy Simpson said the company still had scope to expand its Briscoe Homeware business, both in store numbers and through refurbishment of existing stores.

Three more Rebel Sport stores are planned for 2003 in Nelson, Hastings and Lower Hutt.

The company also plans to open a new Briscoes Homeware store in Lower Hutt in the second half, bringing the total number of Rebel Sport stores to 15 and Briscoes Homeware stores to 29.

The group clocked up $103 million in sales in the three months ended December 31, against $88 million a year earlier. Sales for the year to December totalled $295 million, an increase of 17 percent on the previous year.

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