Briscoe pays price for slump in profit

Homeware and sporting goods retailer Briscoe Group has suffered a hefty share price dip and a downgrade from at least one analyst after news its full-year profit will probably drop 26 per cent.

Briscoe's share price fell 20c to close last night at a record low of $1.10, a drop of more than 15 per cent.

The worst-performing stock on the New Zealand stock exchange's consumer index, Briscoe had been expected to earn $20.8 million, according to the mean estimate of seven analysts surveyed by Thomson Financial.

But on Friday, it said profit in the year to January 31 would probably fall to $17.5 million from $23.6 million a year earlier.

Chief executive Rod Duke put the downgrade to a "highly competitive market" and the cost of opening new stores, which meant earnings did not match an increase in sales.

Shares in Briscoe have fallen more than 33 per cent this year, the worst performance of the 17 members in the stock exchange consumer index. Four of five analysts who follow the stock recommend it as a "hold" and one has a "sell" recommendation.

In a report on the downgrade, ABN Amro changed its recommendation on the stock from hold to "reduce".

ABN Amro said Briscoe had decided to "quit the price war" with other retailers to improve its margins. There had been less discounting as a result.

"We appreciate the merits of the revised strategies for Homeware and Rebel Sport. However, we have remained cautious with respect to execution risk and customer responsiveness to, and adoption of, the new brand strategies. The turnaround for both divisions has had a greater, and more lengthy, negative impact on trading," the ABN Amro report says.