KEY POINTS:
Briscoe Group boss Rod Duke is betting that a change of government, lower interest rates and tax cuts will bring shoppers back.
The owner of Briscoes Homeware, Rebel Sport and Living & Giving today reported a 70.6 per cent fall in interim profit on a 4.4 per cent fall in sales.
The net profit after tax of $3.09 million in the six months to July 27 was down from $10.53m in the same period last year. The interim dividend was cut to 1 cent a share from 3.5c last year, consistent with the policy of paying out at least 60 per cent of tax paid earnings.
Duke said the profit was down so much because the first half of last year was so good and also because rents and labour costs were up. Retailers also spend more on advertising when "consumers are watching what they spend very carefully".
The downturn started last October and was particularly bad in June when petrol prices were high.
Duke is hopeful that lower interest rates, tax cuts and a change in government will turn sentiment around.
"There is a high likelihood there is going to be a change of government."
That and other factors would cause people to feel better about the future.
"I think people will be extremely enthusiastic about a new government. I think this one has just done a John Howard and been there too long," he said.
Duke also believes that consumer confidence has been affected by the high profile failures of many finance companies.
Conditions for retailers were shocking, he said.
He said the result was slightly ahead of the projections given to the market and the gross margin, a measure of profitability, at 39.39 per cent was better than analysts had predicted.
Sales of $181.95m were down from $190.26m last year.
He said just "every damn retailer has been on sale almost every day of every week for 12 months because they are trying to garner as many sales as they can".
On a same store basis, which excludes the impact of opening and closing stores to provide a comparison, homeware sales decreased by 4.59 per cent, while sporting goods sales were off 14.06 per cent. The company has opened nine new stores since July 2007.
The group said it is carefully managing its inventory which only increased to $65.21m from $64.93m last year.
"We are only six weeks into the second half but I'm picking we will be a lot closer to last year's second half profit of $11.91m than our past six month's result of $3.09m," Duke said.
- NZPA
