Briscoe Group promises to deliver another record profit; shares jump

Friday, 4 February 2022

Briscoe is expecting its full-year profit to set a new record.

Briscoe Group expects to post a record full-year profit as it benefits from higher sales and margins. Its shares posted the biggest gain on the NZX.

The company, which owns Briscoes Homeware, Rebel Sport, and Living & Giving, expects profit in the year to the end of January to rise to about $87 million, up from its previous record of $73.2m last year and ahead of its earlier expectation for profit as high as $85m.

Retailers like Briscoe have benefited from increased demand during the Covid-19 pandemic as restrictions on overseas travel and pent-up demand prompted shoppers to open their wallets. In the latest year, the company’s online sales jumped 21 per cent to make up 21.5 per cent of all sales, ahead of 18.8 per cent of sales last year and 11.3 per cent the previous year.

The massive disruption to trading caused by the Covid-19 pandemic accelerated Briscoe’s plans to lift its profit margin through better planning and buying, the use of data analytics for seasonal trading events, improving the flow of inventory and reducing the level of discounted clearance products.

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Managing director Rod Duke said Briscoe’s gross profit margin was expected to be “significantly above” last year’s level. Last year’s profit margin lifted to 43.76 per cent, from 39.43 per cent the previous year.

Briscoe’s sales rose 6.1 per cent to $744.4m. The previous year includes an extra week as the company has to realign its financial calendar every five to six years. Excluding the extra week, sales rose 8 per cent.

Homeware sales lifted 4.9 per cent, lagging behind the 6.7 per cent growth the comparable period previous year, while sporting good sales rose 8 per cent, compared with 10 per cent growth the previous year.

In the latest 13-week period of the fourth quarter, homeware sales lifted 1.4 per cent while sporting goods sales increased 11 per cent.

“Amidst the turmoil, uncertainty and continuing disruption of the pandemic, Briscoe Group has had an outstanding final quarter,” Duke said.

“I’m thrilled that the group has returned a sales lift of nearly 5 per cent for this quarter when adjusted for last year’s additional week of trading. This is a great achievement given retail sales last year were still flying high from the retail recovery post the first national lockdown and also that our Auckland stores were shut for the first nine days of this quarter.”

Duke noted that the upcoming result would include $1.7m in after-tax dividends from the company’s investment in retailer Kathmandu. No dividend was received from Kathmandu last year due to Covid-19.

Shares in Briscoe jumped 4.5 per cent to $6.05, in mid-morning trading on the NZX.

Briscoe will report its full earnings and announce its final dividend payment on March 16.