Announcement
HALFYR: BGP: Half Year Results announcement
11:11am
BGP
14/09/2021 11:11
HALFYR
PRICE SENSITIVE
REL: 1111 HRS Briscoe Group Limited
HALFYR: BGP: Half Year Results announcement
BRISCOE GROUP LIMITED
Results for announcement to the market
Reporting Period: Half-Year 1 February 2021 to 1 August 2021
Previous Reporting Period: Half-Year 27 January 2020 to 26 July 2020
Currency: New Zealand Dollars
Amount (000s); Percentage change
Total revenue
$358,421 +22.6%
Net profit
$47,461 +69.6%
Interim Dividend
Amount per share: $0.11500000
Imputed amount per share: $0.04472222
Record date: 21 September 2021
Payment date: 14 October 2021
Net tangible assets per share
Current period: $1.2610
Prior comparable period: $1.0715
Half Year Review
Briscoe Group Limited (NZX/ASX code: BGP)
Highlights for the 26-week period - 1 February 2021 to 1 August 2021:
o Total sales $358.4 million, +22.58%
o Online sales as mix of total Group sales, 16.16%
o Gross profit $166.66 million, +35.20%
o Gross profit % 46.50% vs 42.16% last year
o Net profit after tax (NPAT) $47.46 million, +69.63%
o Benefits from strategic initiatives being realised
o Interim Dividend 11.50 cps increased from 9.00 cps last year
The directors of Briscoe Group Limited (NZX/ASX code: BGP) announce a net
profit after tax (NPAT) of $47.46 million for the half-year ended 1 August
2021 compared to $27.98 million achieved for last year's first half. The
half-year results are unaudited.
Dame Rosanne Meo, Briscoe Group Chair said, "The results the team have
produced for this first six-month period are very impressive. The way in
which the leadership team continues to grow the relevancy of the underlying
business model, but also challenge itself to progress strategic initiatives
to improve and drive future growth, is a real credit to them."
The directors have resolved to pay an interim dividend of 11.50 cents per
share (cps). This compares to last year's interim dividend of 9.00 cps. Books
will close to determine entitlements at 5pm on 21 September 2021 and payment
will be made on 14 October 2021. The company's dividend policy is to pay out
at least 60% of NPAT when calculated on a full year basis.
Rod Duke, Group Managing Director, said, "$47.46 million of NPAT sets a new
benchmark for the Group and we're delighted to have produced such a strong
first half result. After the strong post-lockdown recovery experienced during
the second half of last year, it's very pleasing to have been able to
complement that recovery with the inclusion of other initiatives which we
have introduced in relation to our three key strategic areas; enhancing the
shopping experience, improving our supply chain and developing new revenue
streams.
The earnings were generated on sales revenue of $358.4 million, an increase
of 22.58% on the same period last year. Rod Duke said, "Clearly, the impact
of COVID-19 caused unprecedented and volatile sales patterns across the first
half of last year, but even using a more normalised comparison with the first
half sales produced 2 years ago, the Group's sales increased significantly by
18.30%, with the first quarter increasing by 14.94% and then strengthening to
an increase of 21.61% for the second quarter.
Gross margin dollars increased by 35.20% for the period from $123.28 million
to $166.66 million, with gross margin percentage increasing from 42.16% to
46.50%. Rod Duke said, "The enhanced analysis and management of promotional
activity has contributed to a step-change in gross margin and we continue to
work very hard to consolidate these gains. We are also seeing the benefits
emerging from the work we are doing with KPMG to improve inventory in
relation to optimising our ordering, allocation, flow in to store and overall
stock levels.
"The team right across-the-board continues to do a fantastic job for us
day-in, day-out and we were pleased to be able to increase the wage rates for
our in-store hourly-paid team by 6.4% from May 2021. The employment market
remains extremely competitive and we expect it to remain so for some time."
The Group received a dividend of $0.96 million from its investment in
Kathmandu Holdings Limited (Kathmandu) during the six months. There was no
dividend received last year as a result of Kathmandu's response to the
COVID-19 situation.
Homeware sales increased by 20.77% from $184.35 million to $222.63 million
and sporting goods sales by 25.66% from $108.06 million to $135.79 million.
The Group's online business continues to perform exceedingly well,
representing 16.16% of Group sales for the half-year. Rod Duke said, "System
developments in relation to the way in which online orders are picked
in-store have resulted in significant productivity and efficiency gains. In
addition to these back-end process improvements we have also enhanced the
front-end online experience with the introduction of functionality allowing
customers to easily find matching and recommended products, as well as
receiving relevant communications via our new personalised email system. In
addition, new search functionality and the introduction of our
'Find-In-Store' stock availability feature will significantly improve the
online customer experience."
Inventory levels as at 1 August 2021 were $101.09 million, up from $86.67
million at the same time last year. Rod Duke said, "Whilst this includes an
additional store opened by the Group during the period, the majority of the
increase reflects significant work undertaken by our merchandise team to
secure inventory in advance of traditional timings, to minimise potential
international supply chain disruptions as a result of ongoing impacts of
Covid-19. These include factory delays, lack of shipping availability, port
disruptions and increased costs. Although inventories have closed higher than
in recent years, we're in great shape for the second half to avoid being
hindered by shortages we have already seen occurring across the wider retail
market. Having sufficient inventory in the current retail environment is a
distinct competitive advantage."
The Group's balance sheet remains strong with cash balances of $93.93 million
at the close of the period, compared to $98.56 million held at the same time
last year.
Work also continued on a number of projects in relation to Group owned
properties during this first half. Significantly, the construction of a new
concept Briscoes Homeware store at 36 Taylors Road, Auckland was completed
and the store opened in early March. Rod Duke said, "We're extremely pleased
with this store and it's trading above expectations. The feedback has been
exceptional with customers enjoying the bigger, brighter and more
contemporary fit-out. Furthermore, it allowed us to introduce a brand-new
Rebel Sport store in the retail space on the ground floor of the Support
Office building at 1 Taylors Road. Again, we're pleased with this new concept
store which opened towards the end of April and services a wide catchment
that we have been keen to be a part of for some time. The success of these
new stores across both our major brands gives us confidence for further
network growth opportunities in relation to the refurbishment and/or
establishment of new stores."
The Group's development at Silverdale is continuing well, with completion
estimated for November 2021. This will see the opening of new generation
Briscoes Homeware and Rebel Sport stores to service the significant catchment
of Silverdale, Hibiscus Coast, Orewa and surrounding areas.
Rod Duke said, "While we continue to enjoy the benefits of a buoyant retail
environment, we are also very focused on progressing our strategic
initiatives, which we see as critical to ensuring the business is strong and
sustainable moving forward. The first year's benefits are on track to meet
expectations and provide a solid complement to the continued strength of the
retail environment.
"Having established improved data and analytics capability we are now
beginning to see the benefits from the programme of work with KPMG in
relation to supply chain improvements. Examples of this include the
redirection of imported product between North and South Island ports as well
as the identification and reallocation of slow-moving product across the
wider store network. Both of these are part of a wider work stream in
relation to optimising the levels, availability and flow of inventory across
the Group's retail network.
"Other initiatives we are seeing benefits from, in addition to the online
developments outlined earlier, include the establishment of easy-to-use
in-store kiosks enabling customers to purchase products online that may be
out of stock in-store, as well as the introduction of new product lines
online which are shipped direct from suppliers. We see the latter initiative
as particularly promising creating the opportunity for us to offer many
additional products that we may not have traditionally held in-store."
Level 4 Lockdown
New Zealand's extended period of near-normality came to a sudden conclusion
with the announcement of a return to national Level 4 lockdown from 18 August
2021.
The Group's first priority is to ensure the health and wellbeing of our
employees and customers - protecting them from the virus itself and, in the
case of employees, from the resulting threats to job and income security. As
we had done in the previous Level 4 lockdown, we have again committed to
continue paying our people in full.
The financial impact of nationwide store closures, as we know from the
previous national lockdown, is immediate and severe. However, we also know
from the same experience that pent-up demand during lockdown drove strong
consumer demand post-lockdown.
The impact of the latest lockdown has again proved immediate for the Group
with the final 2 weeks of August sales negatively impacted by around $17
million. Whilst the continued lockdown in Auckland will continue to have an
impact on sales we are encouraged by the rest of the country moving down
alert levels. Level 3 enables us to extend our product range from essential
items only to our full range via online trading, and also to offer
Click-and-Collect service. Level 2 enables our stores to re-open responsibly,
ensuring we follow prescribed protocols in relation to social distancing and
PPE.
Our modelling assumes Auckland to be at Level 4 or 3 for the remainder of
September, with the rest of the country at level 2 or 1. Under these
assumptions we estimate September sales could be negatively impacted by
around the same level as August.
Clearly, the level of uncertainty around economic conditions has greatly
increased since 18 August, and the degree to which consumer demand will
rebound as different parts of the country move down alert levels is also not
certain; however, from last year's experience we do expect pent-up demand to
drive strong Group sales levels from October through to the end of the
Group's financial year on 30 January 2022.
If that is the case and New Zealand continues to progress without any further
lockdowns or outbreaks, we currently expect to be able to produce a NPAT
above last year's record of $73.2 million and up to $85 million.
The Group's next planned market release will be shortly after its 3rd quarter
which closes on 31 October 2021.
Tuesday 14 September 2021
Contact for enquiries:
Rod Duke
Group Managing Director
Tel: + 64 9 815 3737
End CA:00379098 For:BGP Type:HALFYR Time:2021-09-14 11:11:13
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