Briscoe Group impacted by $1.2 million accounting change
Briscoe Group will see a $1.2 million impact due to a changed leasing standard, which is expected to hit net profit, despite a successful winter clearance programme helping to drive an increase in group sales in the first half.
Group sales grew 3.3 per cent to $303 million over the 26 weeks to July 28, 2019, with Briscoe’s homewares and sporting goods segments seeing a 2.57 per cent and 4.68 per cent improvement in sales respectively.
“We are relatively pleased with the sales performance for the second quarter, and despite continued pressure on margins and increased wage cost pressures, the second quarter has produced a profit marginally ahead of that for the same period last year,” Briscoe Group managing director Rod Duke said.
“Sales through our online channel continue to grow strongly and are now approaching 11 per cent of total group sales, having grown at over 20 per cent compared to last year’s half-year.”
However, a new accounting standard, known as NZ IFRS 16, is set to impact the group’s bottom line.
“The effect of this change on NPAT will occur gradually throughout the year and will impact the first half tax-paid profit by around $1.2 million in addition to the change incurred from normal trading,” Duke explained.
According to Duke, New Zealand retailing remains highly competitive, sensitive to continued cost and margin pressures as well as subdued consumer and business confidence, which has impacted business performance.
Briscoe Group isn’t alone in experiencing this, with more than half of retailers failing to meet their sales targets across the second quarter, according to Retail NZ.
“Across the sector many are continuing to point to business and economic uncertainty. For the second quarter in a row, this uncertainty is the largest issue that negatively impacted retailers, indicating that consumer unwillingness to spend is continuing on,” Retail NZ said in its latest Retail Radar report.
Looking forward, 43 per cent of retailers surveyed by Retail NZ said they expect to fail to meet targets for the upcoming third quarter, signalling a lack of confidence in short-term performance of the sector.