Briscoe Group posts revenue increase, puts store expansion plans on backburner amid downturn
Thursday, 4 May 2023
Briscoe Group chief executive Rod Duke says the homeware and sporting goods retailer is preparing to pull back on investment in new store expansion and refurbishments as discretionary spending softens.
Duke, who is Briscoe’s largest shareholder, said economic conditions and the softening of retail spending would probably mean the group made less money in the months ahead.
Despite being in a strong cash flow-positive financial position, Briscoe would put spending on hold.
On Thursday Briscoe said it had grown sales by 2.82% to $181.2 million in the first three months of trade in its financial year when compared to the same period last year.
Sales in its homeware business Briscoes increased by 2.85% to $109.9m in the quarter, while sporting goods sales at Rebel Sport increased by 2.78% to $71.3m.
**READ MORE:
* Briscoe third-quarter sales rise 15%; retailer upbeat heading into Christmas
* Coronavirus: No sales at level 4 but no redundancies, says upbeat Briscoes boss
**
“Those Covid years, I’ll admit were a surprise to me, were quite buoyant; they were pretty good years. I don’t think I can replicate those two years in the next two years. I think the suburbs are starting to hurt,” Duke said.
He pointed to a bank saying recently that 35% of its housing loan book had still not rolled over to increased rates, which meant more households would soon have less money to spend.
“My profit will be less than the prior year. We are looking to hang on to some of the gains we have made and doing something other clever things around the edges to save some money, but that does not include staff redundancies.”
Recent retail spending figures by Worldline show spending softened at the end of April.
Core retail spending reached just over $3 billion in April, up 3.8% on April last year, but the rate of growth was down from 8.3% in March.
Analysts and banks predict spending to drop as the year progresses.
Duke said he expected Briscoe to be affected, but not to the extent of some of its competitors.
“Will we be affected? Absolutely. Will we be the most-affected in the sector? Probably not. I think some in retail, the fringe dwellers who are highly-borrowed and their sales aren’t that flash … I think some of them might disappear.”
Briscoe Group had $149.9m in the bank and no debt as at January 29.
In the year to January 29, Briscoe made a net profit of $88.4m.
Last month Briscoe and Rebel Sport opened new stores in Ashburton. The group would still refurbish some stores in the months ahead, but would put on hold store refurbishments and relocations that could be stalled, said Duke.
“I’m not going ahead with the expenditure plans that I had in calendar year 2023/2024. I’m stalling those.
“I had a huge refurbishment of Palmerston North [planned], Rebel and Briscoes is in one building, and we won’t do that this year. We will put that on the back burner,” said Duke.
“The cost of building and refurbishment now is silly compared to what it was a couple of years ago, and the economy looking forward with food inflation and the election and housing … it would be prudent for me to reschedule those works and expenditure to a later date.”
Briscoe has almost 90 stores across the country. Duke said there was not many more it could roll out, and the group was instead focused on refurbishing and relocating existing shops.
“The major expansion to new stores is more about refurbishment.”
Duke said the group continued to look for retail brands to acquire to add to its portfolio in complimentary categories.
He would not say which retail categories it was looking at opportunities in.