Briscoe beats annual profit forecast

See also: What would tempt Briscoe's Duke to take another tilt at Kathmandu

Briscoe Group [NZX: BGR] beat its full-year profit forecast and says it is "cautiously optimistic" about the year ahead in a "challenging" retail environment.

Profit increased to $47.1 million in the 53 weeks ended January 31, from $39.3 million in the 52-week period ended January 25, 2015.

That is ahead of the retailer's forecast last month for a profit of at least $46.5 million.

Sales rose 9% to $552.9 million. On a same-store basis, and adjusting for an additional week in the latest year, sales increased 5.4%.

Briscoe's profit reached a new record, with its gross profit margin increasing to 40.5% from 38.9% the year earlier, as the retailer focused on inventory management, new technology to manage stock, refined the quality and breadth of its international and local product ranges, fine-tuned its promotions and gained from prudent foreign exchange cover.

"Central to our success has been our drive to continually improve all aspects of our business," says managing director Rod Duke.

"It is clear that the New Zealand retailing environment remains challenging with a number of retailers struggling for growth, but we remain cautiously optimistic about the year ahead for Briscoe Group."

Mr Duke says retailers this year will need to focus on protecting their gross margins as the imported cost of overseas goods increases and as the New Zealand dollar weakens against the US dollar.

The company will pay a final dividend of 9.5c per share on March 31. That takes the total dividend for the year to 15.5c per share – one cent better than last year.

Briscoe shares rose 0.6% to $3.16 and have gained 9.4% this year.

In Briscoes homeware division, earnings before interest and tax jumped 22 % to $40.4 million, as sales advanced 6.2% $357.9 million. The company added one homeware store in Queenstown during the year, taking the total to 47, extended its Invercargill store and relocated to larger premises in Taupo and Hamilton. The total store area increased to 100,085m² from 95,787m².

For the sporting goods unit, ebit rose 36% to $25 million as sales advanced 15% to $195 million. The unit's total floor area increased to 56,394m² from 53,993m² after it added new stores in Hornby and Queenstown.

Online sales accounted for 4.5% of group sales during the year and the company said it anticipates strong growth to continue for the foreseeable future.

The company's inventories increased to $80.2 million at the end of the year, from $73.5 million a year earlier, reflecting the three additional stores and the increased stock held to satisfy the significant increases in online sales and higher amount of product the company imports directly.

The retailer plans to open new Briscoes Homeware and Rebel Sports stores at the Westgate shopping development northwest of Auckland and expand its homeware stores in Dunedin and in Taranaki Street in Wellington.

Its cash and bank balances at the year-end stood at $17.6 million, from $89.7 million a year earlier, reflecting its $68.7 million purchase of a 19.9% shareholding in outdoor equipment and clothing retailer Kathmandu Holdings. Briscoe failed in its takeover bid for the company, although Mr Duke says he "remains open to the idea of progressing this at some stage in the future."

(BusinessDesk)