Investors fail to get excited over Briscoe success

Retailer Briscoe Group has delivered a solid fourth quarter performance, despite a tough pre-Christmas period for the sector. It’s predicting another full-year of profit growth — its the ninth in a row.

But investors remain ho-hum about the stock.

Briscoe Group, which owns the Briscoe’s homewares and Rebel Sport chains and a minority stake in chain Kathmandu, reported a 5.8 per cent rise in fourth-quarter sales and samestore, or stores open 12 months or more, growth of 5.1 per cent.

Net profit after tax for the year ended January 27 is expected to be around $63 million — a new high, said Briscoe Group managing director Rod Duke. Annual group sales were $631.9m, up 4.4 per cent on last year, and gross profit margin is expected to be up slightly.

Duke said bad weather before Christmas had been “challenging” for retailers.

“It’s been a little difficult, but we’ve come through it. Full year, it’s been a record for sales and profitability.”

Online sales were up 27 per cent on the 2017 year, Duke said.

“We’ve been thrilled with our online business. We’re hitting a new customer base, selling into spots where we haven’t got shops.”

Online revenues in are now 9.5-10.5 per cent of total revenues, Duke said. “I didn’t expect it to be so fast.”

Carolyn Holmes, head of equity research at financial service provider ShareClarity, says doing well in a challenging market is a testament to Duke’s years of retail experience.

And next year could be another “interesting” one, Holmes says. A weakening dollar will make importing more expensive, and any slowdown in the economy will hit the company’s customers.

“The Briscoes store market is related to people replenishing their homes, the Rebel Sport spend is also discretionary. However, Rod Duke does a good job. He’s been through these cycles before,” Holmes said.

However, a series of recordbreaking results isn’t impressing investors. Duke owns 78 per cent of the company, meaning trading isn’t particularly liquid, but the share price has gradually headed south since highs of $4.50 in March 2017.

Yesterday’s positive result saw the stock edge up 1.5 per cent, or 5 cents, to $3.29.

Holmes says Briscoe Group is vulnerable because it’s a retail stock.

Duke says it’s frustrating retail is out of favour, and other companies have been hit too. The Warehouse’s share price fell 30 per cent in 2017 and hasn’t recovered, and Michael Hill International is worth only a third of what it was in early 2017.

Would Duke consider leaving the stock market altogether? Maybe one day, he says, but it’s not on the cards at the moment.