Figures tell a tale of two retailers

5:00AM Thursday May 08, 2008
By Errol Kiong

Briscoe Group's first quarter sales were down 9.7%

Briscoe Group expects a potential fall in first half profit of more than 50 per cent as a retailing malaise sets in and says other firms face a similar prospect.

The sporting goods and homeware retailer, widely seen as a barometer of the industry's general health, yesterday reported a 9.66 per cent drop in same store sales for the first trading quarter, ending April 27.

But the announcement came as Wellington listed department store Kirkcaldie & Stains reported a near 13 per cent increase in half-year profits on the strength of a stellar summer. However it also warned of darker days ahead.

Briscoe managing director Rod Duke said rising interest rates and petrol prices were putting the squeeze on households, which would affect the wider retailing industry.

"Being relatively the first cab off the rank, you'll find this particular trend that's being shown in our numbers will be relatively widespread."

Unaudited sales for the quarter were $90.3 million, 6.4 per cent lower than for the same quarter last year.

Sporting goods sales were hardest hit, falling 10.3 per cent to $29.5 million, while homeware decreased by 4.3 per cent to $60.7 million. On a same store basis, sporting goods sales were 15.1 per cent down, while homeware fell 7.1 per cent.

Duke said the retail market for this quarter was "markedly more challenging", with a continuation of the difficult trading conditions experienced during the latter part of last year.

The group expected to report a significantly lower profit for the half year ending July 27, with an estimate of between $5 million and $7 million - down from last year's $10.5 million.

Kirkcaldie & Stains, meanwhile, has overcome the sluggishness reported by the likes of The Warehouse and Briscoe, reporting a net profit for the six months ending February 29 of $829,000, an increase of 12.8 per cent. Sales were up 2.4 per cent, while revenue was up 1.9 per cent to $24.4 million, aided by strong apparel sales.

Managing director John Milford said a hot summer helped fashion sales. A larger gross profit was achieved by making sales at normal margins during the early part of the fashion season. More product was also sourced directly from overseas.

But he was circumspect on the outlook.

"I think we are going to have to work a lot harder to maintain that sort of performance.

"My perspective is that customer confidence is being eroded ... the focus within everything seems to be about the economic conditions.

"There are people I could argue who actually have more money to spend because there are people in the country who actually have savings and are earning more interest.

"Obviously factors like petrol increases and food increases do hit everyone."

An unseasonably long and warm autumn could also work against them, he said.

Forsyth Barr retail analyst Guy Hallwright said while retailers did not all perform in the same way, a drop in sales of 4 per cent - like with Briscoe's homeware business - was a possibility across all store types. He said clothing retailers were very dependent on seasonal weather patterns.

Shares in Briscoe Group closed down 11c at $1.12, while Kirkcaldie & Stains ended up 5c at $2.85.