Briscoes issues profit warning after 'subdued trading'

Friday, 10 January 2025

Briscoes says a highly competitive retail environment is “placing pressure” on its gross margins and bottom-line profit.

Retail bellwether stock Briscoes has warned investors its profit will fall short of previous expectations following “subdued trading” in its important holiday-season quarter.

The company had forecast a net profit of between $70 million and $77m in its financial year ending January 26.

But managing director Rod Duke stated in an announcement to the NZX on Friday morning it now expected to miss that forecast.

“We now believe the group’s full year net profit after tax will not meet the previous range given by the group but will be greater than $66m,” he said.

2024 saw a cascade of retail, hospitality, and other businesses close their doors for good in 2024.

The new guidance excludes a previously announced $7.4m one-off hit to its books stemming from a rule change over tax depreciation on commercial buildings.

Duke said Briscoes was yet to see any marked improvement in consumer confidence hoped for on the back of decreases in the official cash rate.

That was in line with “recent reports highlighting a struggling economy and sluggish spending across retail”, he said.

“While there were some positive signs across ‘Black Friday’ promotions, we believe the event was diluted by the continued economic downturn as well as the amount of promotional activity that started considerably earlier than previous years.

“While Christmas trading, particularly our Boxing Day promotions, improved compared to Black Friday, December trading was still under anticipated levels.”

Nevertheless, Duke said Briscoes’ expectation it would finish the year “at 99% of last year’s record full-year sales” would be a significant achievement.

Unaudited figures showed its total sales during the 48 weeks ending December 29 were down just under 0.3% on the same period in 2023.

“The current highly competitive retail environment continues to place pressure on both gross margins and bottom-line profit,” Duke said.

“A benefit of trading as hard as we are throughout this fourth quarter will be a January year-end inventory position which will close under last year and ensure the group is extremely well placed for our new financial year.”