Briscoe posts 10% gain in annual profit, says cautiously optimistic about the year ahead

Briscoe Group 12-month price history (NZX.com)

Briscoe Group [NZX: BGR], which posted a 10 percent gain in annual profit, said it is "cautiously optimistic" about the year ahead as many retailers struggle to grow earnings.

Net profit rose to $33.6 million in the 52 weeks ended Jan. 26, from $30.5 million a year earlier, the Auckland-based company said in a statement. That's in line with its most recent forecast in January that profit would exceed $33 million, although below the $34.1 million mean forecast of analysts polled by Reuters. Sales rose 6.8 percent to $483.6 million, compared with analyst expectations of $482.5 million.

Briscoe, which operates homeware and sports goods chains, said the past year was challenging for many retailers as a slow start to winter and increased rivalry prompted it to offer "more aggressive promotions" which reduced its margins.

"The group's gross profit margin for the year decreased from 38.86 percent to 38.5 percent, reflecting the extraordinarily challenging beginning to the year as a result of the very late start to the winter category sales and also the continued competiveness of the market throughout the year," managing director Rod Duke said.

"While many commentators are talking up the outlook for the New Zealand economy, we see a number of retailers continuing to struggle to grow profitability," Duke said. "Our experience leads us to be cautiously optimist about the year ahead for Briscoe Group."

The company didn't provide a specific forecast for earnings in the coming year. Briscoe is expected to post 2015 net profit of $36.8 million on sales of $506.8 million, according to the mean forecast of analysts polled by Reuters.

Shares in Briscoe Group fell 1.2 percent to $2.53, crimping their 6.7 percent advance so far this year.

In the 2014 financial year, the company's homeware stores boosted earnings before interest and tax by 6.7 percent to $31.2 million as it closed three Living & Giving stores, opened a new Briscoes Homeware store and refurbished other stores.

Earnings at the company's sporting goods division rose 22 percent to $12.6 million as it refurbished five of its 32 Rebel Sport stores and rejigged the counters and apparel fixtures at seven other stores to free up additional retail space to boost sales.

The company's online business had significant sales growth during the year across all three brands, Duke said.

Briscoe will pay a final dividend of 8 cents a share on March 31, up from 7 cents a share the year earlier.

(BusinessDesk)

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