Paul Robertshaw, chief investment officer with Octagon Asset Management, said the local market felt a bit nervous and fragile about the earnings downgrades coming through – though Fletcher Building was a one-off (with the additional $105m provision for NZ International Convention Centre).
“Restaurant Brands (the stock was unchanged at $5.20) has had a horror show with its (profit) margins miss, KMD Brands is experiencing slower sales, Mainfreight had an earnings downgrade, and people are worried about Freightways.
“The gentailers and Auckland International Airport are holding up and investors are wanting stocks with defensive earnings,” Robertshaw said.
“But Rod Duke and Briscoe have done it again. Their sales are only down a little bit in a competitive space of general merchandise. They have a simple business model and have done a great job compared with The Warehouse, and Hallenstein Glasson which has been volatile,” he said.
Briscoe Group increased 10c or 2.16 per cent to $4.74 after reporting a steady sales performance for the half-year ending July. Group sales increased 0.35 per cent to $369.2 compared with the same period last year, with homeware up 0.28 per cent and sporting goods 0.46 per cent.
The group is expecting half-year net profit of more than $42m, compared with $45.6m in the previous corresponding period, and said it will be difficult to replicate last year’s record net profit of $88.4m.
Briscoe told the market the retail environment continues to be difficult and unpredictable, and the widely-reported explosion in retail crime continues to have a significant operational as well as economic impact. The Briscoes and Rebel Sport group has increased its security capital expenditure.
Briscoe is focussing on its gross margin and protecting half of the 633 basis points gained during the previous two years ending January. The group is expecting gross profit margin percentage to be about 200 basis points below last year and doesn’t think it will have the same decline in the second half year.
Other retailers Hallenstein Glasson was down 15c or 2.45 per cent to $5.96; The Warehouse declined 2c to $1.70; Michael Hill decreased 1c to 99c; and KMD Brands was up 1c to 91c.
Fisher and Paykel Healthcare declined 36c to $23.51, with American respiratory competitor Vapotherm overnight downgrading its earnings guidance.
Ebos Group fell 80c or 2.19 per cent to $35.70; Mercury Energy was down 9c to $6.53; Summerset Group declined 13c to $10.07; Skellerup Holdings decreased 7c to $4.29; Fletcher Building shed 5c to $5.39; and Freightways was down 12c to $8.35.
PGG Wrightson declined 9c or 2.1 per cent to $4.20; Millennium & Copthorne Hotels NZ was down 9c or 4.52 per cent to $1.90; ikeGPS shed 2c or 2.7 per cent to 72c; Move Logistics decreased 3c or 3.61 per cent to 80c; 2 Cheap Cars fell 4c or 7.02 per cent to 53c; Winton Land was down 4c to $2.42.
Contact Energy was up 6c to $8.36; a2 Milk increased 54c to $5.62; Stride Property gained 5c or 3.47 per cent to $1.49; NZME added 3c or 3 per cent to $1.03; and Comvita improved 6c or 1.8 per cent to $3.40.
Accordant Group was up 3c or 2.56 per cent to $1.20; Vista Group gained 4c or 2.22 per cent to $1.84; and Just Life Group rose 4c or 10.81 per cent to 41c.
ArborGen Holdings, down 0.001c to 18.9c, has bought a eucalyptus nursery in Brazil, with capacity to produce 15m seedlings a year, for $5m. ArborGen is one of the largest commercial suppliers of eucalyptus and pine seedlings in Brazil with seven nurseries and production capacity of 80m seedlings a year, plus contract growing supplies of 50m.
General Capital, up 0.003c or 3.75 per cent to 8.3c, told the market that Borneo Capital has sold the shares, representing 0.06 per cent of its issued capital, bought on-market in mid-June. The purchase was a potential breach of the Takeovers Code and the Takeovers Panel is taking no further action.
