Briscoe forecasts first-half profit gain on impact of cost cuts

Friday 1st May 2009

Briscoe Group, which operates homeware, Rebel Sports, Urban Loft and Living & Giving chains, forecast a gain in first-half profit as cost cuts help fatten its margins even as sales growth stalls.

Profit in the six months through July will exceed year-earlier earnings, which tumbled 71% to $3.1 million. Sales in the first quarter ended April 26 slipped 0.1% to $90.2 million, or down 0.9% on a same-store basis.

The retail group has cut costs in the past 12 months by removing a tier of regional managers and installing its most experienced people back into stores, with profit incentives tied to their outlets, managing director Rod Duke said. Inventory levels have also been trimmed.

“I have probably got a little less negative,” Duke said in an interview. “The cost of doing business – we have really done a fabulous job on that and its significantly different to what it was 12 months ago. But sales are flat – we’re literally making no headway in terms of sales.”

Shares of Briscoe rose 3 cents to 82 cents on the NZX yesterday. In the past month they’ve climbed almost 9%, while the NZX All Ordinaries rose 6%.

Gross margin and earnings before interest and tax in the first quarter were ahead of the year-earlier period. Homeware sales fell 3.4% to $58.7 million while sporting goods sales climbed 6.6% to $31.5 million. On a same-store basis, homeware sales fell 4.6% and sports goods rose 6.6%.

“We are happy with the result for this quarter but recognise that the retail market is likely to continue to be extremely competitive with sales levels very unpredictable,” Duke said.

Net profit in the year ended January 25 tumbled 48% to $11.6 million.

Businesswire.co.nz

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