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Briscoe says first-half profit rose 21% on fatter margins, online sales

Briscoe Group [NZX: BGR], the homeware and sporting goods retail chain, lifted first-half profit 21 percent, bolstered by an insurance settlement, and as second-quarter sales rose, margins widened and increased online sales offset a highly competitive retail environment,

Net profit rose to at least $18 million in the six months ended July 27, from $14.9 million a year earlier, the Auckland-based company said in a statement. The bottom line includes the finalisation of a $1.3 million business interruption claim for the February 2011 Christchurch earthquake, it said. Sales rose 6.5 percent to $231.5 million, and were up 6.3 percent on a same-store basis.

"Strong sales, improved margin performance, growth in our online channel and ongoing efficiencies through the group have resulted in bottom line profit tracking ahead of last year," managing director Rod Duke said. That was "despite the late start to winter, which did slightly impact our second quarter sales and gross margin percentage across the winter-dependent categories."

In March the retailer said it was “cautiously optimistic” about the year ahead after posting a 20 percent gain in annual profit. The retail sector has been struggling with increased competitiveness and aggressive promotions as the rag trade in particular tries to tackle the rise of online shopping and a high kiwi dollar, which has seen New Zealand bargain hunters shop offshore. A slow start to winter further crimped sales, with shoppers not rushing to buy warmer clothes.

The company's gross margin improved in the first-half reflecting the strength of the New Zealand dollar, giving the retailer stronger buying power, and improved marketing strategies, Duke said, which was "more than offsetting high levels of competitiveness across the retailing sectors in which the group operates."

Last month, Duke told BusinessDesk the company held a "highly protectionist view of the currency" and was "fairly well hedged" with just a small percentage left over.

Second-quarter sales rose 7.2 percent to $116.7 million in the three months ended July 27, with homeware segment revenue gaining 6.3 percent and sporting goods rising 9.4 percent, it said without giving a dollar figure. On a same store basis second-quarter sales rose about 7 percent.

The shares, of which Duke holds about three-quarters, rose 3 percent to $2.79, and have advanced 13 percent this year.

(BusinessDesk)