Briscoe doubles profit

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Fairfax Media

SOLID PERFORMANCE: Briscoe Group has reported a more than doubling of earnings for the half year to July 26.

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Briscoe Group has reported a more than doubling of earnings for the half year to July 26.

The retailer reported today that earnings rose to $6.52 million from $3.09 million at the same time a year ago. The result was in line with recent guidance given to the market by the company. As the company had previously indicated, included in the profit figure was an "asset impairment adjustment", which knocked $827,627 off the result.

This related to four specialty stores within the group's 58 store homeware segment that have not achieved acceptable levels of profitability.

Briscoe's latest profit was achieved on revenues - earlier reported by the company - of $185.3 million, up 1.8 percent.

A dividend of 2 cents a share will be paid, compared with 1c at the same time a year ago.

Last year's half-year earnings were hit hard by the recession and downturn in consumer spending, with profits having tumbled from $10.5 million in the previous comparable period. Briscoe operates the Briscoes Homeware, Rebel Sport and Living & Giving stores.

Briscoe responded by restructuring management and operations and keeping a tight rein on costs. The move to full operation in mid-to-later 2008 of a multi- million dollar IT system upgrade had also helped considerably with stock and profit margin control.

Managing director and 75 percent Briscoe shareholder Rod Duke said the company had been "really pleased" to be able to report such a good recovery for the first half of the year.

"If you were to exclude the impairment adjustment as a one 'one-off' correction, net profit would have been 138 percent higher than the half year performance of last year," he said.

The market continued to be very competitive with the level and frequency of discounting increasing, particularly throughout the homeware market.

"The challenge for us has been to drive profitability without the reliance on substantial top-line sales growth," Duke said.

The initiatives implemented around inventory management and cost control had protected profit margins (gross margin percentages increased to 40.34 percent from 39.39 percent) and enhanced profitability, he said.

"For example, significantly reducing the size of our marketing function, further developing the profit centre structure within which our stores operate, introducing steering committees to the buying process and continuing to demand improved value on all cost lines have all contributed to a more efficient and effective cost base."

Duke said he was optimistic about Briscoe's performance in the second half of this year.

"Inventory is in great shape and we will continue to benefit from the operating efficiencies, albeit at a diminishing rate, generated from the cost reduction initiatives implemented progressively since early last year.

"The uncertainty of the economic environment continues to make it difficult to accurately predict a result for the second half of this year. While we are confident of exceeding the $8.5 million net profit we achieved for last year's second half, the percentage increase is likely to be considerably less than the increase achieved for the first half of this year."

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