Despite stormy weather in the retail sector in the past year, Briscoe Group managing director Rod Duke says he is chuffed with how his retailer performed but wary of further rain falling from the wellbeing budget.
Duke, in his 70s, has been managing director of the retail giant since 1988. He owns 77% of Briscoe Group, including the Briscoe stores, Rebel Sports and Living & Giving.
Despite obstacles, like house prices slowing down, Duke said the retailer was “very successful” in the year to January 27, with profit up 3.4% to $63.4 million from the year prior. Group sales and dividends to shareholders rose in the year too, supported by new stores and big promotional periods.
“I think our result was probably just a hair above what the general market was expecting.”
Challenges arose from minimum wage increases, especially as “parity considerations” meant it had to adjust for all wage earners.
A low Kiwi dollar, of 66USc, added further weight, Duke said. “Where you get about 10c variations in the cost of your goods, you really have to think seriously about margins.”
The retailer’s bottom line sank by $600,000 for the quarter ending on April 28 compared to the year earlier but its unaudited sales rose 2.62% from $146.8m to $150.6m.
Although the Coalition government’s wellbeing budget was “all very nice,” Duke said it should consult affected groups before mandating anything. “We would all love to participate in it but, realistically, you’ve just got to think about what the nation can afford.”
The Group expects to report a flat half-year profit.
The government should consider possible ramifications of wellbeing-mandated schemes as they could be “self-defeating” if businesses began losing profit, which meant less tax revenue for the country. “When the tax rate is reduced … there is a lot less money to allocate to important projects.”
Duke said higher wages didn’t always mean more money in circulation, as while some will spend it in the economy, others will pay any debt they have.
On the horizon
Overseas business opportunities were being looked at “very regularly” but Duke said he was waiting for a business that fitted his team’s core competency.
“I’ve got to be convinced we can make a difference, it can be amalgamated easily, and I can use, in this new company, the expertise I already have,” Duke said.
Asked about his succession plan, something shareholders raised as vital at the group’s annual general meeting on May 22, Duke said he was grooming three colleagues.
He didn’t know when he would retire or what he would do with his chunky stake of Briscoe Group when he does.
The group has a 19.8% stake in outdoor retailer Kathmandu, with Duke remaining an “interesting spectator” on buying further shares. “Nothing is off the table,” he said.
Duke said his valuation of $815m, up from $750m last year, was backed by increased dividends and the purchase of two residential properties.
Duke’s infamous helipad
Reconstruction on his boatshed at his property in Herne Bay, Auckland was expected to restart “very shortly” as Auckland Council had nearly approved all aspects of his building consent form, Duke said.
Once finished, he would apply for landing rights to use a helipad being built on the roof of his boatshed. “We think it will be contested on certain grounds and to mitigate those arguments we’re now undertaking tests and analysis … noise, vibrations, etc.”
In 2018, Duke gained consent from the council to rebuild his boatshed and landing rights to use a helipad but the council was asked to reconsider its decision after legal pushback from environment group Kawau Island Action said it lacked consideration for beachgoers.
Duke said he was neither going to land a helicopter on the beach nor use one to access golf courses but instead to quickly reach his stores across the country.
“I could go to Hamilton, Tauranga, Whakatane, Rotorua and couple of other stops on the way back in a day, that’s going to take me three and a half days otherwise,” Duke said.
He wasn’t buying helicopters or flying them himself either but would rent one when needed.
2018: $750 million
Rawdon Christie was talking to Rod Duke on August 8, 2019.