New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>Briscoe Group reported a mixed 1Q25 trading update, with slightly softer sales but a better gross margin outlook than anticipated.</li><li>A target to maintain gross margin and profitability at similar levels to FY25, with a slight recovery in gross margins noted.</li><li>Upcoming annual shareholder meeting on 15 May 2025 expected to provide a strategic update, including on the NZ$100m distribution centre in Wiri.</li></ul>

Briscoe Group reported a mixed 1Q25 trading update, with slightly softer sales but a better gross margin outlook than anticipated.A target to maintain gross margin and profitability at similar levels to FY25, with a slight recovery in gross margins noted.Upcoming annual shareholder meeting on 15 May 2025 expected to provide a strategic update, including on the NZ$100m distribution centre in Wiri.

Briscoe Group - 1Q26 Trading Update—Cooling Down

<ul><li>Accent Group has entered a strategic agreement with Frasers Group to launch and operate Sports Direct in Australia and New Zealand, potentially impacting Briscoes Group's Rebel Sport business.</li><li>EPS impact on Rebel Sport NZ is estimated to be -3% to -7% by FY33, with store roll-outs beginning in Australia.</li><li>BGP is trading slightly above its long-run average with a 14x 12-month forward PE, under a NEUTRAL sentiment.</li></ul>

Accent Group has entered a strategic agreement with Frasers Group to launch and operate Sports Direct in Australia and New Zealand, potentially impacting Briscoes Group's Rebel Sport business.EPS impact on Rebel Sport NZ is estimated to be -3% to -7% by FY33, with store roll-outs beginning in Australia.BGP is trading slightly above its long-run average with a 14x 12-month forward PE, under a NEUTRAL sentiment.

Briscoe Group - Sports Direct Stepping on Toes

<ul><li>We initiate coverage on Briscoe Group (BGP) with a NEUTRAL rating and a NZ$4.95 target price.</li><li>We recognise that BGP is a high-quality retailer and are attracted to its ability to drive strong returns through-the-cycle.</li><li>Despite this, we view the risk–reward at current levels as balanced, given: (1) domestic operating conditions are likely to remain soft through 2025; (2) competition will remain elevated as IKEA opens later this year; (3) BGP is a mature retailer with a lean operating cost base, providing limited levers to offset cyclical challenges; and (4) its investing NZ$100m into its distribution centre (DC) project, which will consume free cash flow over the next two years, with margin benefits longer-dated. </li></ul>

We initiate coverage on Briscoe Group (BGP) with a NEUTRAL rating and a NZ$4.95 target price.We recognise that BGP is a high-quality retailer and are attracted to its ability to drive strong returns through-the-cycle.Despite this, we view the risk–reward at current levels as balanced, given: (1) domestic operating conditions are likely to remain soft through 2025; (2) competition will remain elevated as IKEA opens later this year; (3) BGP is a mature retailer with a lean operating cost base, providing limited levers to offset cyclical challenges; and (4) its investing NZ$100m into its distribution centre (DC) project, which will consume free cash flow over the next two years, with margin benefits longer-dated. 

Briscoe Group - Quality Retailer at Full Price—Initiate NEUTRAL

Thematic (Sector/Industry)

<ul><li>After a challenging few years for NZX-listed retailers, we are starting to see signs that the worst may be over.</li><li>Australian retailers that reported in August indicated that the consumer backdrop has improved sequentially throughout 2025 in New Zealand.</li><li>For the upcoming September reporting season, we will be looking for updates on recent trading, promotional pricing activity, cost control, and capital management.</li></ul>

After a challenging few years for NZX-listed retailers, we are starting to see signs that the worst may be over.Australian retailers that reported in August indicated that the consumer backdrop has improved sequentially throughout 2025 in New Zealand.For the upcoming September reporting season, we will be looking for updates on recent trading, promotional pricing activity, cost control, and capital management.

Retail Sector Checking Out Reporting Season

<ul><li>NZ retailers sourcing from China could benefit from excess manufacturing capacity and lower input costs.</li><li>A -1% reduction in China sourcing costs could increase sector gross profit dollars between +0.2% to +1.1%.</li><li>KMD Brands is better positioned to mitigate tariff-related headwinds than initially anticipated.</li></ul>

NZ retailers sourcing from China could benefit from excess manufacturing capacity and lower input costs.A -1% reduction in China sourcing costs could increase sector gross profit dollars between +0.2% to +1.1%.KMD Brands is better positioned to mitigate tariff-related headwinds than initially anticipated.

New Zealand

Briscoe Group Limited owns and operates the Briscoes Homeware chain of retail stores and the Rebel Sport chain of retail sporting goods stores throughout New Zealand, under a limited franchise agreement with Australian company Rebel Sport Limited.

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Briscoe (BGP NZ)

Briscoe Group - 1Q26 Trading Update—Cooling Down

Briscoe Group reported a mixed 1Q25 trading update, with slightly softer sales but a better gross margin outlook than anticipated.

Forsyth Barr

Briscoe Group - Sports Direct Stepping on Toes

Accent Group has entered a strategic agreement with Frasers Group to launch and operate Sports Direct in Australia and New Zealand, potentially...

Forsyth Barr

Briscoe Group - Quality Retailer at Full Price—Initiate NEUTRAL

We recognise that BGP is a high-quality retailer and are attracted to its ability to drive strong returns through-the-cycle. Despite this, we view...

Forsyth Barr

Retail Sector Checking Out Reporting Season

Australian retailers that reported in August indicated that the consumer backdrop has improved sequentially throughout 2025 in New Zealand.

Forsyth Barr

Retail Rundown - Getting to the Source

NZ retailers sourcing from China could benefit from excess manufacturing capacity and lower input costs. A -1% reduction in China sourcing costs...

Forsyth Barr

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