Half Yearly Results to 28 July 2013

The directors of Briscoe Group Limited announce a 12.38% increase in net profit after tax (NPAT) to $14.92 million for the half-year ended 28 July 2013. This compares to last year’s $13.28 million half year result. The half-year results are unaudited.
The directors have resolved to pay an interim dividend of 4.50 cents per share (cps). This compares to last year’s interim dividend of 4.00 cps and represents 65% of the Group’s NPAT. Books will close to determine entitlements at 5pm on 20 September 2013 and payment will be made on 30 September 2013.
The earnings were generated on sales of $217.37 million compared to the $204.73 million generated for the same period last year. On a same store basis the Group’s sales for the half year ended 28 July 2013 were 3.67% ahead of the same period last year.

Earnings before interest and tax (EBIT) of $19.90 million were generated for the six months to 28 July 2013. This compares to $17.47 million for the same period last year and represents an increase of 13.91%.

Gross margin percentage decreased from 39.68%% to 39.18% reflecting an extraordinarily challenging beginning to the year as a result of the very late start to the winter category sales.

The reported gross margin and prior year comparisons also reflect a reclassification of costs that the Group has applied to the financial statements for this half year and which will be applied for future periods. As a result of the Group’s regular review of reporting practices and policies, costs relating to the distribution of product from the central warehouse facility to stores have been reclassified from store expenses and administration expenses to cost of goods sold. The reclassification will bring the cost allocations in line with the allocations adopted by other New Zealand retailers making the costs more directly comparable.

Reported gross profit margin for the current half year is 39.18% as compared to 40.40% before the reclassification. The prior year comparative has been adjusted from 40.73% to 39.68%. Correspondingly, expenses have been decreased by a total of $2.66 million for this half year as a result of the reclassification and by $2.14 million for the prior year comparative. As the reclassification represents a transfer of cost only, there is no impact to Group EBIT or NPAT.

In the period under review, homeware sales increased 6.23% from $137.24 million to $145.78 million and sporting goods sales increased 6.06% from $67.50 million to $71.59 million.

On a same store basis, homeware sales increased by 3.16%, while sporting goods sales increased by 4.72%.

Rod Duke, Group Managing Director, said: “We are very pleased with this first half result. Gross profit margin suffered throughout the first quarter but recovered well during the second quarter to finish slightly down on last year’s rate, however, continued strong sales growth has delivered a bottom line profit 12.4% ahead of the reported profit for the first half of last year.

“During the first half of this year the number of stores remained unchanged at 80, but in October we will open a new Briscoes Homeware store in Kerikeri. This will become our most northern store which we know is eagerly anticipated by people in that region.

“We have completed counter realignment projects in four Briscoes Homeware and eight Rebel Sport stores since the beginning of the year and all of these stores have benefited from the improved service counter configuration as well as the extra selling space for additional merchandise.

“During the second half of the year we will significantly change the layouts in the Dunedin and Invercargill Rebel Sport stores as well as undertake further counter realignments for Rebel Sport stores in Porirua and New Plymouth.

“The Group’s online business continues to grow and during the first half of the year we have focused on improving product availability as well as the time from fulfillment to customer. We are encouraged by the growth in online and will continue to focus resource to ensure development of this key area of our business.”

Inventory levels at 28 July 2013 were $69.16 million, $4.56 million higher than the $64.60 million at the same time last year reflecting the additional stores opened since July last year, increased stock holdings to satisfy the significant increases experienced in online sales, increased levels of product directly imported by the Group and also the build-up of stock for the new Briscoe Homeware store to open in Kerikeri.

Rod Duke, said: “We look forward to a continued improvement in customer confidence and spend levels during the second half of this year and are cautiously optimistic about the Group’s performance on the back of improving economic indicators.”

Highlights for the 26 week period ended 28 July 2013:
• Total sales $217.37 million, +6.17%
• Same store sales growth, +3.67%
• Gross profit $85.16 million, +4.82%
• Gross profit margin 39.18% vs 39.68% last year
• EBIT $19.90 million, +13.91%
• NPAT $14.92 million, +12.38%
• Interim Dividend 4.50 cents per share, +12.50%

Thursday 5 September 2013

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