Briscoe posts 17% gain in annual profit, in line with forecast

Briscoe Group [NZX: BGR], the homeware and sporting goods retail chain, posted a 17% gain in annual profit, in line with its forecast, as it increased margins on more efficient operations.

Profit rose to $39.3 million, or 17.8 cents per share, in the 52 weeks ended January 25, from $33.6 million, or 15.3cps, in the year earlier period, the Auckland-based company said in a statement. That's in line with the company's forecast for profit of "no less than $39 million". Sales rose 4.9% to $507.1 million.

Briscoe improved its profitability during the year, with its gross profit margin increasing to 38.9% from 38.5% the year earlier, as the retailer enhanced its inventory management, introduced new technology to stores to manage stock, refined the quality and breadth of its product ranges, improved its store layouts and benefited from a strong New Zealand dollar.

"We are confident that, with the initiatives we have, our drive to continue to improve the way we do things in every area of the business, and the pleasing start we have made to the new financial year, we will continue to strengthen our position as New Zealand's leading retailer of homeware and sporting goods," managing director Rod Duke says.

"We are cautiously optimistic about the year ahead."

Shares in Briscoe last traded at $2.95 and have slipped 0.7% so far this year.

The company will pay a final dividend of 8.5cps on March 31. That takes the total dividend for the year to 14cps, ahead of the year earlier 12.5cps.

In the homeware division, earnings before interest and tax rose 6.2% to $33.2 million as sales increased 3.2% to $337.2 million. Although the number of homeware stores remained at 46, the company increased its total floor area to 95,787sq m as it relocated its Wanganui and Coastland stores.

This year, the company plans to refurbish its Invercargill and Gisborne homeware stores, while the Hamilton and Taupo stores will be relocated to larger and better sites.

It will open new Briscoes Homeware and Rebel Sport stores in Westgate in Auckland and in Queenstown, while a new Rebel store will also open in Hornby in Christchurch.

"These major projects will provide customers with brand new state-of-the-art stores, which can be expected to result in improved customers experience and higher levels of profitability," Mr Duke says.

For the sporting goods unit, annual ebit  jumped 45% to $18.4 million as sales advanced 8.3% to $169.9 million. The unit's total floor area increased to 53,993sq m after it opened a new store at Coastlands and relocated its Wanganui store.

The company's inventories increased to $73.5 million from $69.3 million a year earlier, reflecting the additional Rebel Sport store at Coastlands, increased stock holdings to support online sales and higher levels of product directly imported by the group.

Annual earnings were boosted by a $1.34 million gain in the first half after the settlement of the group's business interruption insurance claim relating to the 2011 Canterbury earthquake.

(BusinessDesk)