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Bellwether retailer Briscoe Group has warned shareholders to expect up to an 80 per cent drop in half year net profit after tax.
In an update to the market yesterday, the operator of Briscoes Homeware, Living & Giving and Rebel Sport stores said it expected net profit after tax for the six months ended July 27 to be between $2 and $3 million. The group had posted a $10.5 million profit for the same period last year.
Managing director Rod Duke said like other retailers, it has been experiencing extremely difficult trading conditions, with consumer confidence at its lowest in 17 years.
Total sales for the half year were expected to be approximately $11 million, or 5.8 per cent, below the $190 million achieved for the first half of last year, despite the addition of 12 new stores. Same store sales have been tracking around 9 per cent behind last year's.
Duke said there continued to be substantial pressure on margins.
"Compared to the first half of last year, there have been material increases in expenses for employee remuneration, reflecting both the costs of staffing the new stores, as well as the impact of the legislative changes affecting holiday pay, youth rates and minimum wage."
Warehousing and distribution costs, including fuel, have also increased significantly.
Duke expected the challenging times to continue, with second half results expected to be lower than last year's. But the percentage decline would not be nearly as large as the first half's, he said.
Briscoe shares ended yesterday down 11c at 99c.
