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Briscoe Group issued a profit warning for its half-year results yesterday in what analysts say will be the first of many downgrades in the slowing retail sector.
The company said half-year profits to July 29 would be as much as 15 per cent lower than the $12 million it earned in the same period last year.
Managing director Rod Duke said Briscoe was hurt by a late start to winter.
He said first half performance also reflected the cost of starting two new homeware chains, Living & Giving and Urban Loft.
Both had "highly seasonal trading patterns with profitability heavily weighted to the second half of each year".
Duke insisted other retailers had been hurt by the climate conditions that led to discounting in June. Retail analysts approached by the Business Herald agreed.
Warren Doak of Macquarie Equities said the Briscoe profit announcement would set the theme for lower profits elsewhere in the market.
"Everyone is hurting - almost certainly Hallensteins and The Warehouse," said Doak.
Forsyth Barr retail analyst Guy Hallwright said the retail market was heading into a more sluggish period. "The message to investors in retail stocks is to not expect anything too flash," he said.
Duke predicted that the second half of the year would see the group bounce back and would end with Briscoe matching last year's $26.05 million profit.
"We expect the full-year result to be no less than the profitability achieved for last year," he said. This expectation takes into account that the second half of last year was particularly challenging.
Duke said increased returns would come from Living & Giving and second half returns traditionally made up more than 60 per cent of Briscoe's turnover.
But another retail analyst thought expectations were optimistic and would mean the chain had to deliver 13 per cent higher profits than it did last year.
Doak said few people would predict that trading conditions were about to improve in the second half.
"I don't know if Rod Duke will deliver those profits though I think that he believes he will do it. Do I think investors are prepared to buy into it? - the answer is no."
Shares in Briscoe Group closed down 8c at $1.53.
Branching out
* Briscoe Group's biggest outlets are with Briscoe Homeware and Rebel Sport.
* New chains established last year include Living & Giving and Urban Loft.
* The retailer yesterday downgraded half-year profits.
* But it is aiming to bounce back and match last year's $26 million full-year result to January 29.
