Briscoe Group disappoints in a flat retail market

By Duncan Bridgeman

Thursday 5th February 2004

Further heat has gone out of the retail sector, with Briscoe Group yesterday forecasting a drop in full-year profit.

The once high-flying retailer disappointed the market with fourth-quarter sales up just 3% on the same period a year ago.

On a same-store basis, excluding newly opened stores, sales for the quarter were down 3% on the same period last year.

The shares slid 5c to a new low of $1.59 immediately after the announcement, against a year high of $2.78.

The company said group tax-paid profit was expected to be about 4% below last year's $23.6 million, after the impact of lower interest income and the provision for a tax expense.

ASB Securities broker Stephen Wright said investor interest in the retail sector had all but disappeared.

"If you were expecting a ho-hum result then you've got it."

Briscoe Group added three new stores during the quarter, including a further two Rebel Sport stores.

The company now operates 30 homeware stores and 17 sporting goods stores.

On a same-store, same-day basis, Rebel Sport continued to struggle, with sales decreasing by 2.9%. However, Briscoe Homeware sales increased 6.18% over the past year. During the fourth quarter, total homeware sales increased 2.9% to $74.5 million and Rebel Sport sales rose 3.36% to $31.7 million.

The company said full-year group earnings before interest and tax were expected to be in line with the $33.3 million reported for last year, reflecting the impact of higher sales and margin, offset by increased operating costs.

"In general, everybody's expectations have been wound down and I don't think you are going to see too much slippage in Briscoe ... the share price is just going to tread water for a while yet," Mr Wright said.

Investors punished Briscoe in November following third-quarter sales that were up 6.22% for the three months to October on the same corresponding 2002 period.

Managing director Rod Duke said at the time the results were lower than expected with Rebel Sport the main drag on sales. Aggressive competition was also a factor.

National retail sales figures for November were also softer than expected, down 0.4% on October, the first drop since March. However, record sales were recorded during the Christmas period.

Briscoe Group said December was a record sales month.

It expected a marginal improvement in full-year gross profit.

Fellow retailer The Warehouse is due to release its second-quarter sales results on Tuesday, the same day Michael Hill International releases its February first-half results.

Both companies have reported slowing New Zealand sales in recent months.

Appliance retailer Pacific Retail this week warned it would lose money this year because of the costs of restructuring the newly acquired Powerhouse chain in the UK.

However, it reported "excellent" trading over December and January for the New Zealand retail arm.

Briscoe Group recently changed to calendar month-end reporting.

With that adjustment, and on a same-store basis, the group's sales for the 12 months ended January 31 were 3.44% ahead of the same period last year.

The company's sales are subject to seasonal factors, including Christmas and summer-winter splits.

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