Tax-paid profit rose to $20.5 million in the six months ended July 26.
Briscoe Group managing director Rod Duke talks about his company's result on NBR Radio and on demand on MyNBR Radio.
See also: Briscoe not quite ready to concede defeat on Kathmandu takeover
Briscoe Group [NZX: BGR], the retail chain mounting a hostile takeover of Kathmandu Holdings [NZX: KMD], lifted first-half profit 11%, meeting guidance on improved margins and revealing it has picked up just 2.3% of the 80.1% of Kathmandu shares it doesn't already own.
Tax-paid profit rose to $20.5 million in the six months ended July 26, up from $18.5 million a year earlier, and in line with July's forecast of at least $20 million, the Auckland-based retail company said in a statement. Sales increased 5.4% to $244 million, compared to the first half of the previous financial year.
Gross margin increased to 41% from 39.6%.
"The gross margin percentage continues to benefit from the constant focus on inventory management with initiatives such as the stock receipting (via scanning) project implemented last year throughout all Briscoes Homeware and Rebel Sport stores," the statement said. This had streamlined inventory management.
"The continued refinement of the quality and breadth of local and international product ranges also continues to deliver margin gains for the group."
In the six-month period, Briscoe reported its homeware earnings before interest and tax increased 11% to $17.6 million, while sales advanced 3% to $158 million. Its sporting goods unit lifted earnings 29% to $10.7 million, while sales climbed 10% to $86 million.
Briscoe has mounted a so-far-unsuccessful takeover bid for Kathmandu, offering the outdoor equipment chain's shareholders five Briscoe shares for every nine Kathmandu shares as well as 20 cents per share, in a bid to buy the remaining 80.1% of the stock it doesn't already own. Kathmandu's board has rejected the offer and so far acceptances of the offer represent just 2.3% of the register. A creep announcement to the NZX this morning now puts Briscoe's shareholding in Kathmandu at 22.2%.
Briscoe managing director Rod Duke has said "take it or leave it" to the shareholders, but has reiterated he won't be upping the offer, which closes on September 17.
"We are obviously disappointed in the low acceptance level in response to our offer," Duke said. "This suggests to us that Kathmandu shareholders are expecting the company to reverse the negative trends in its operating and financial performance of recent years, and to deliver greater value increases than they would obtain from a merger of the two companies.
"As the largest shareholder in Kathmandu, we would like its performance to improve and for the value of our 20% Kathmandu shareholding to rise, but we see little chance of a turnaround sufficient for the directors' published forecast of a $30 million profit after tax for their 2015-16 financial year (ie a 50% increase) to be achieved," Duke said.
Briscoe shares rose 0.7% to $2.97. Kathmandu shares gained 0.7% to $1.53 and have declined some 30% since the beginning of the year.
Kathmandu has announced a review of its head office structure, which could cut up to 10% of top management employees in Australia and New Zealand. In August the outdoor goods retailer said earnings before interest and tax probably slumped to $33.7 million in 2015 in the face of discounting, narrower margins and a disappointing Christmas season, from $64.3 million last year, with a recovery to $48.2 million forecast for the 2016 financial year.
(BusinessDesk)
