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Briscoe Group warned of difficult trading ahead as the economy slows.
Briscoe Group expects to post a record full-year profit but warns of tougher times ahead as deteriorating economic conditions hurt consumer sentiment.
The company, which owns Briscoes Homeware and Rebel Sport, expects profit of at least $88 million for the year to the end of January, up from $87.9m the previous year. Sales rose 5.6% to a record $785.9m.
Conditions are getting tougher for retailers as the economy is expected to slip into recession this year as the Reserve Bank hikes interest rates to combat high inflation.
“We are seeing increasing pressure as the impacts of the economic downturn are felt,” said managing director Rod Duke.
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“We expect the deteriorating economic conditions and subsequent negative impact on customer sentiment to continue into the 2023 calendar year and do not underestimate how difficult trading will be.”
Still, he said the company had a very strong core business which had proven to be very agile through previous difficult trading periods and he expected to outperform most other retailers in New Zealand.
In the past year, homeware sales lifted 5.8% while sporting goods sales increased 5.2%. Online sales made up almost 19% of all sales.
“To achieve this considering the continued deterioration in economic factors impacting consumer confidence and subsequent retail spending, is an outstanding achievement,” Duke said.
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He noted the first quarter had been significantly influenced by the Omicron outbreak which impacted foot traffic to bricks and mortar stores.
From the second quarter, the retailer began to see the influence of negative economic sentiment on the back of significant cost of living increases including food and fuel inflation, increased interest rates and falling house prices, and the deterioration in confidence continued to impact throughout the third and fourth quarters, he said.
The economic downturn had impacted profit margins, with Briscoe expecting its margin to have weakened by 175 basis points from the previous year’s 45.76%, he said.
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Briscoe shares closed up 2.6% to $4.75 on the NZX on Friday.
