Briscoe Group reports lift in 1H sales despite headwinds

Monday 5th August 2019

Briscoe Group continues to shrug off headwinds in the retail sector, reporting a lift in first half sales but noted net profit would be hit by a $1.2 million adjustment as a result of the way leases are treated in the new accounting standard.

The homewares and sporting goods retailer reported sales of $303 million in the 26 weeks ended July. 28, up 3.3 percent on the previous first-half year.

The Group’s homeware segment increased sales by 2.6 percent during this period and the sporting goods segment by 4.7 percent.

On a same-store basis, sales were 2.7 percent higher in the 26-week period.

“We are relatively pleased with the sales performance for the second quarter and, despite continued pressure on margins and increased wage cost pressures, the second quarter has produced a bottom-line profit marginally ahead of that for the same period last year,” said managing director Rod Duke.

The retail sector has been battling a challenging retail environment in which online purchases have undermined the traditional 'bricks and mortar' networks and where business and consumer confidence have been falling.

Duke noted sales through Briscoe Group’s online channel continue to grow strongly and are now approaching 11 percent of total group sales, up more than 20 percent on year-earlier six months.

However, “New Zealand retailing remains highly competitive, sensitive to continued cost and margin pressures, as well as subdued consumer and business confidence," said Duke.

The latest ANZ-Roy Morgan survey of consumer confidence fell 6 points in July to 116.4, the lowest reading so far this year and below the historic average of 120.0. Earlier, ANZ's business outlook survey showed confidence continued to weaken in July, with a net 44.3 percent of respondents expecting general business conditions will deteriorate during the coming year, compared with 38.1 percent in June.

“In relation to the group’s half-year profit, we anticipate a trading performance similar to the first half of last year,” said Duke.

Net profit in the year ended July 29, 2018 was $29.3 million, up 2.7 percent on the year.

However, "in addition to the competitive trading environment, this year’s reported bottom line, as noted in last year’s financial statements, will be impacted by the introduction of the new accounting standard in relation to the treatment of leases,” he said.

As a result, an additional negative adjustment will be made to the final reported net profit after tax of around $1.2 million, Duke said.

Briscoe Group is due to report its first half results on Sept 17.

The shares were unchanged at $3.43 and have lifted 1.5 percent so far this year.

(BusinessDesk)

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