Briscoe sales defy retail blues

Briscoe Group continues to shrug off headwinds in the retail sector, reporting a lift in first-half sales — but noting net profit would be hit by a $1.2 million adjustment as a result of the way leases are treated in the new accounting standard.

The homewares and sporting goods retailer, which operates Rebel stores, reported sales of $303m in the 26 weeks ended July 28, up 3.3 per cent on the previous first-half year.

The group’s homeware segment increased sales by 2.6 per cent during this period and the sporting goods segment by 4.7 per cent.

On a same-store basis, sales were 2.7 per cent higher in the 26-week period.

The retail sector has been battling a challenging environment in which online purchases have undermined the traditional “bricks and mortar” networks and where business and consumer confidence have been falling.

Managing director Rod Duke noted sales through Briscoe Group’s online channel continue to grow strongly and are now approaching 11 per cent of total group sales, up more than 20 per cent on year-earlier six months.

However: “New Zealand retailing remains highly competitive, sensitive to continued cost and margin pressures, as well as subdued consumer and business confidence,” said Duke.

The latest ANZ-Roy Morgan survey of consumer confidence fell 6 points in July to 116.4, the lowest so far this year and below the historic average of 120.0. Earlier, ANZ’s business outlook survey showed confidence continued to weaken in July and a net 44.3 per cent of respondents expected general business conditions to deteriorate during the coming year, compared with 38.1 per cent in June.

“In relation to the group’s half-year profit, we anticipate a trading performance similar to the first half of last year,” said Duke.

Net profit in the year ended July 29, 2018 was $29.3m, up 2.7 per cent on the year.

However, “this year’s reported bottom line, as noted in last year’s financial statements, will be impacted by the introduction of the new accounting standard in relation to the treatment of leases”, he said.

As a result, an additional negative adjustment will be made to the final reported net profit after tax of around $1.2m, Duke said.

Briscoe Group is due to report its first half results on September 17.

The shares were unchanged at $3.43 and have lifted 1.5 per cent so far this year.