Briscoe fends off margin squeeze as sales growth underpins profit gain

(BusinessDesk) - Briscoe Group [NZX:BGP] coped with a margin squeeze in the latest financial year to deliver a new record profit as sales growth continued to underpin earnings.

Net profit rose to $61.3 million, or 27.3 cents per share, in the 52 weeks ended Jan. 28, from $59.4 million, or 26.5 cents, a year earlier, the Auckland-based company said in a statement. Sales rose 3.5 percent to $603.1 million, offsetting a contraction in gross margin to 40.49 percent from 41.07 percent a year earlier.

The company's profit "was a very satisfactory result in what had been a highly challenging year," managing director Rod Duke said. "The small decrease in gross profit margin was a function of the intense competition across the retail sector and other competing claims on consumers' discretionary spending."

Briscoe signalled another record profit when announcing fourth-quarter sales last month, bolstered by strong revenue gains from its Rebel Sport sporting goods stores.

The board declared a final dividend of 11.5 cents per share, payable on March 29 with a March 26 record date. That takes the annual payment to 19 cents, up from 18 cents per share a year earlier.

The shares, of which Duke owns about 78 percent, rose 0.3 percent to $3.68, having increased 6.4 percent so far this year.

Briscoe recognised an $18.8 million gain in the value of equity securities, although that wasn't included in the net profit, and received a $5.2 million dividend from its 19.8 percent stake in Kathmandu Holdings, which reports next week. The outdoor equipment chain's shares rose 3.1 percent to $2.35.

Duke said Briscoe's board is "an interested observer of Kathmandu's performance and of potential opportunities in the industry more broadly."

Briscoe invested $14 million buying property, plant and equipment and intangible assets, down from the $18.3 million it spent a year earlier, and said expanding and enhancing the Briscoes and Rebel Sport stores are a priority for the retailer.

The company's operating cash flow shrank to $69.5 million from $86 million a year earlier, and after investment and finance activities, there was a net inflow of $18.1 million, leaving Briscoe with cash and equivalents of $78.2 million.