Briscoe: It's difficult out there

The burning question for embattled retailers this year is whether they've seen the worst of the recession yet, says Briscoe Group managing director Rod Duke.

Announcing a 48.2 per cent fall in net profit for the year to January 25, Duke said it was "difficult out there".

"I'm actually looking for things that will convince me it's going to be less challenging and I can't find a lot of them right now."

Briscoes' performance improved in the latter six months of the year, after a 70 per cent fall in first half net profit to just $3.09 million.

The final result of $11.63 million, down from $22.44 million in 2007-08, represents a 28 per cent fall in tax paid profit in the second half.

Same store sales for the operator of the Briscoes, Rebel Sport, Living & Giving and Urban Loft brands fell 6.6 per cent during the year.

Sporting goods retailer Rebel Sport suffered particularly badly, experiencing an 8.64 per cent decline.

Duke said Briscoes had entered this year prepared for more tough times.

The company conducted a productivity project last
year and had cut a lot of wastage out of its labour bill and other costs such as utilities.

It had also micro-managed inventory levels, and was reaping the benefits of new financial and stock management systems put in 18 months ago.

He was keen to emphasise the group's $63 million in cash and bank balances, up from $49 million the previous year.

He said that was a luxurious position to be in compared with many other retail companies.

"It's batten down the hatches, it's do all the clever things that retailers can do - minimise a lot of costs, be particularly frugal until such time as there is clear evidence the country is likely to pull through this."

Duke said the company's store opening programme for 2009-10 "remains on a lesser scale" than for past years.

Meanwhile, the company was introducing some of the mid-range Living & Giving lines into its more upmarket Urban Loft store in downtown Auckland, in an effort to create wider appeal.

Briscoe Group joins other retailers in reporting a decline in profits. Last week The Warehouse announced a 23 per cent drop in net profit to $49 million for the six months to January 25, and said sales were down 2 per cent.

Briscoe's shares closed unchanged last night at 62c.

PROFIT FALLS

Year to January 25

Sales revenue
2009 - $388.47m
2008 - $407.75m

Net profit
2009 - $11.63m
2008 - $22.44m

Dividend
2009 - 4.5c
2008 - 8c