Briscoe's full-year profit rises 25%

Briscoe Group managing director and majority shareholder Rod Duke says profit rose about 25% to $59 million in the year ended January29 as retailer resisted discounting to protect its gross margins.

Mr Duke gave the guidance while releasing sales figures for the fourth quarter and full year.

Sales in the 52 weeks ended January rose 5.4% to $583 million from $553 million in the 53-week period a year earlier.

Homeware sales at its Briscoes chain rose 4.1% to $373 million while sporting goods sales through its Rebel Sport outlets gained 7.9% to $210 million. Same-store sales rose 4.9%, reflecting a 3.8% gain at Briscoes and a 7% increase at Rebel.

The figures show some slowing of momentum in the final quarter of the year, with sales up about 1.8% from a year earlier, when adjusting for the extra week in the 2016 financial year.

On an unadjusted basis, sales in the final 13 weeks of the 2017 year fell 2.2% to $189 million as homeware sales fell 2.2% to $123 million and sporting goods sales dropped 2% to $65.7 million.

"The strong growth in sales recorded throughout the first three quarters of the year eased a little on the back of one less week being included in this quarter compared to last year's final quarter, a slow start to the Christmas trading period and also the late and inconsistent weather so far this summer," Mr Duke says.

"We made the decision early in the fourth quarter to protect gross profit and profitability by resisting the temptation to unnecessarily chase profitless sales".

Mr Duke, who owns about 78% of the company, says its gross margin "will finish the financial year significantly ahead of last year despite the continued aggressive promotional activity across the retail markets in which we operate and the impact of increased product cost as foreign exchange cover taken in previous years was replaced with currency at less favourable rates."

When announcing its third-quarter sales in November, Mr Duke said he expected gross margin percentage "to remain under pressure for the balance of the financial year.”

Briscoe is scheduled to release its full-year audited results on March 14.

Its shares last traded at $4.08 and have gained 41% in the past 12 months, outpacing a 14% gain for the S&P/NZX 50 Index.

The stock is rated a 'buy' based on a poll of two analysts by Reuters, with a median price target of $4.13.

(BusinessDesk)