'Extraordinary and concentrated' demand post-lockdown gives Briscoes a boost

Friday, 31 July 2020

Retailers like Briscoe Group have benefited from strong consumer demand during the Covid-19 pandemic as people spent money at home rather than travelling overseas.

A surge in post-lockdown shopping has given homewares retailer Briscoes a “welcome boost”, after a disappointing first quarter.

Briscoe Group's unaudited second-quarter results were announced to the NZX on Friday morning.

Sales for the group, which includes Rebel Sport and Living and Giving, for the six months ending July 26 were down 3.5 per cent to $292 million on the same period last year.

However, sales from May 14 onward rose significantly, in what group managing director Rod Duke described as “extraordinary and concentrated” demand, resulting in a 39 per cent bump in sales for the period.

The second quarter saw group sales up by 28 per cent year-on-year to $195m, with sales of homeware goods and sporting goods driving this. Online sales rose by 23 per cent.

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Briscoe Group is a dominant force in New Zealand's retail sector.

Duke said Covid-19 had caused an “unprecedented and volatile sales patterns across the first half of this year.”

“Our first-quarter sales finished $53.6m behind the same quarter last year as a result of the lockdown imposed from March 25 and throughout April.

“Like many other retailers the group has experienced a significant lift in sales since the lockdown was lifted on May 14 and this gave our second-quarter numbers a welcome boost,” he said.

A Kmart store earlier this month with stock shortages across the homeware section.

For the first half of the year, stores were closed for 50 days due to lockdown.

Duke said the group was conscious of the need for continued caution as the fallout from Covid-19 continued to affect consumer spending and employment, particularly as the wage subsidy scheme came to an end in September.

Briscoes now expected to report a first half profit closer to last year’s. Changes to accounting rules as a result of the Covid-19 response allowed the reintroduction of tax depreciation on commercial and industrial buildings, which would have a positive impact on results, Duke said.

“It is important to note that this an accounting adjustment only and has no cash impact.”

Briscoe Group had received a wage subsidy of $11.4 million from the Government.

Hamilton Hindin Green financial adviser Mark Hampton told Stuff last week that a combination of the built-up demand and money saved during the more severe alert levels, along with people being stuck at home with time to think about what needed upgrading around the house, had resulted in a “big slingshot back” for homeware sales.

First Retail Group managing director Chris Wilkinson said major competitors to Briscoes had also experienced severe supply shortages, which “would have played successfully into Briscoes hands”.

“There was a lot more demand for these products as people turned to cooking, baking and entertaining at home, during and after Covid,” he said.