The CEO of Briscoe Group – the parent company of Rebel Sport NZ and Briscoe Homewares – is not underestimating just how tough trading will continue to be in 2025.
Rod Duke told shareholders today that the first half of Briscoe’s financial year – starting January 27 – is expected to be especially challenging.
“We expect this will see second half profitability exceed that produced for the first half in a return to a more normalised shape of profitability,” Duke said. “We are hopeful that the economic recovery will gradually emerge as the year continues, which will assist us to achieve our goal of protecting this year’s level of profitability.
“Looking further out we are excited about the benefits and profit growth potential from the initiatives already mentioned which we believe will drive growth across the next three to four years.”
The comments come as Briscoe Group reported a full year sales slip of 0.04 per cent for 2024 compared to 2023, with its Rebel Sport segment down by NZ$178,000 to NZ$301.6 million (~A$273.65 million), while its homewares segment was down by NZ$306,000 to NZ$489.8 million.
Duke said that to drive full year sales that is 99.94 per cent of the previous year in the current New Zealand economy is quite an achievement.
“Three of the quarters produced positive sales growth and while there was an inevitable margin deterioration to deliver those sales, it’s important to bring context to what has been an incredibly challenging year.”
Compared to 2019, group sales are up by 21.2 per cent, with gross profit margin up by 0.94 per cent to 40.37 per cent. This is despite gross margin percentage dropping from 42.40 per cent compared to the prior year.
Commenting on the margin drop, Duke said this is not dissimilar to what other retailers are facing as the impacts of the ongoing economic downturn continued to be felt.
“Whilst we expect margin pressure to continue, including from a weaker New Zealand dollar, our goal this year is to at least stabilise group gross profit margin % and we have a number of initiatives to assist with this.
“These include; lower levels of clearance product, the introduction of deeper analysis of promotion planning and monitoring, and the implementation of a new merchandise planning tool (Impact Analytics) which will improve the quality of product purchasing and sell-through.
“As previously highlighted, this year’s gross profit margin percentage still represents a 94-basis point improvement on the Group’s margin produced for the year immediately prior to covid (year-ended January 2020).”
Cost control continues to be key for Briscoe Group, Duke added, with the year closing with a total of store and overhead costs only 1.11 per cent higher than the previous year.
“This is a significant achievement considering the 6 per cent wage rate increase for our in-store hourly-paid team made in May 2024 as well as substantial increases absorbed throughout the business including for power, occupancy, warehousing and IT.
“The Group’s full-year result was negatively impacted from KMD Brands Limited’s decision to not pay any dividends during the year,” Duke said. “Last year the group received NZ$2.9 million (pre-tax) from its investment in KMD Brands.”
Briscoe Group holds a 6.75 per cent stake in KMD Brands – which manages Kathmandu, Rip Curl and Oboz Footwear.
Meanwhile, Briscoe Group’s inventories totaled NZ$99.7 million at year-end, NZ$5.2 million below the NZ$104.9 million reported for last year.
Duke said inventory management remains a key focus and that despite intense sales pressure, the team has improved both stockturn and the quality of closing inventory.
“We’re happy with the inventory we are currently holding but realise continued inventory improvements will be critical in enabling us to deliver future sales and margin growth,” he said. “With the introduction of Impact analytics and further inventory optimisation across categories, we have set a goal to further reduce inventory levels by the end of this financial year.
The group’s online business represented just under 20 per cent of group sales financial year end on January 26.
Duke confirmed there are plans to re-platform its online business’ front-end to an Adobe system, alongside the launch of its ‘Marketplacer’ platform which he said will enable the company to rescale its ability to connect customers with various suppliers and products through increased direct-to-consumer options.
“In addition to working towards these new implementations, the team has also introduced a number of other initiatives this year including; enhancements to our coupon offerings, an express delivery service, Apple Pay and a suite of AI tools to optimise product data management. Ensuring our customers always have the best possible access to online as well as bricks and mortar is an important driver for us.”