Daily ShareChat: Briscoe Group

By Jenny Ruth

Friday 25th September 2009

Briscoe Group's first-half result was largely driven by gross margin improvements and was despite a modest increase in sales, says Goldman Sachs JB Were analyst Buffy Gill.

While sales rose 1.8% in the six months, gross margin rose from 39.4% of sales in the previous first-half to 40.3%.

"This was due to tighter inventory management with the new SAP system now having been in full operation for 12 months," Gill says.

Briscoe's new management structure and sales-based remuneration system helped cut operating costs by 5%.

While sales through the homewares stores were down 0.1% and same-store sales were down 1.4% compared with the previous first half, that reflected four new stores being opened in the last 12 months.

"More importantly, however, the quarterly same-store sales trend showed an improvement." First quarter same-store sales were down 4.6% while second quarter sales were up 1.7%.

Sales through Rebel Sport were up 6.2%. "We believe growth was driven by a particularly cold and wet winter encouraging sales of winter sporting gear."

Gill is forecasting Briscoe will lift annual net profit from $11.7 million in the year ended January 25 to $17.8 million in the current year, up from her previous $17.3 million forecast, and to $20.7 million in 2011.

BROKER CALL: Goldman Sachs JB Were rate Briscoe Group (NZX: BGR ) as buy.

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