Briscoe profit rises 111%

Wednesday 9th September 2009

Briscoes Group, the owner of homeware, Rebel Sports goods, Urban Loft and Living & Giving chains, posted a 111% gain in first-half profit, meeting its guidance, as cost cutting and the introduction of inventory management software helped fatten margins.

Profit rose to $6.5 million in the six months ended July 26, from $3.1 million a year earlier, the company said in a statement. Sales grew 1.8% to $185 million. In August, managing director Rod Duke said profit would be at least $6 million.

“The initiatives we have implemented around inventory management and cost control have protected our margin and enhanced profitability,” Duke said. “The market continues to be very competitive with the level and frequency of discounting increasing, particularly throughout the homeware market.”

For the second half, Briscoe expects to exceed last year’s profit of $8.5 million, though the earnings gain wouldn’t be on the same scale as the first-half surge. Shares of Briscoe rose 2.6% to $1.18 and have soared 92% in the past six months, lifting the retailer’s market value to $243 million. The company will pay a first-half dividend of 2 cents a share, up from 1 cent a year earlier.

“Inventory is in great shape and we will continue to benefit from the operating efficiencies, albeit at a diminishing rate, generated from the cost reduction initiatives,” Duke said.

Inventory levels slipped to $64.89 million at July 26, from $65.21 million a year earlier. The retailer’s gross margin percentage increased to 40.34% from 39.39%, mainly reflecting the benefits of the introduction of its SAP system, which allows better analysis and tracking of inventory.

Homeware sales fell 0.1% to $126 million, or a declined of 1.4% on a same-store basis. Sporting goods sales rose 6% to $55.8 million.First-half earnings included an impairment charge of $827,627 against four homeware stores that failed to meet profit targets.

Businesswire.co.nz

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