New Zealand Professional Investment Services Firm

Forsyth Barr

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.

New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

<h2>Briscoe Group<br>4Q21 Sales Checkout</h2>
<p></p>
<div>
<h2>RESEARCH&nbsp;INSIGHTS</h2>
</div>
<p>Briscoe&nbsp;Group (BGP) has delivered yet another stellar quarter with 4Q21 group sales up +18% on the prior year period accompanied by gross margin expansion. Following a strong Christmas trading period, BGP has lifted FY21 NPAT guidance to in excess of NZ$70m. We lift our FY21E NPAT +12% to NZ$72m. BGP has&nbsp;benefitted&nbsp;from a buoyant consumer backdrop, which we expect to continue in the near-term, supported by both rising house prices and a reallocation of travel spend with borders remaining closed. As such we also upgrade our FY22 NPAT forecast +26% to NZ$74m, to reflect the expectation consumer momentum remains in place for longer.&nbsp;</p>
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/187/880/original/image_64260516831612916059977.png?1612916063" class="editor-image img-responsive" data-smartkarma-image-id="187880"></figure>
<div>
<h3>Strong Christmas period, margin expansion the highlight</h3>
</div>
<div id="m_4622534485184451121igo6m">
<p>BGP announced 4Q21 sales of NZ$248m, up +18% on the prior year period, albeit bolstered by the inclusion of an extra week. On a same-day, same-store sales basis, group sales increased +12% with both brands strong. Consumer momentum remained strong through the holiday period, with record Boxing and Black Friday sales days. Gross margin expansion was the key highlight through FY21 as the combination of a motivated consumer and tight inventory positions lowered discounting activity. BGP has made a number of small tweaks to its discounting tactics, which are likely to deliver more enduring margin expansion. In addition, we understand supply chains&nbsp; and therefore inventory levels remain tight, albeit comfortable, supporting a continuation of favourable gross margin.</p>
</div>
<div>
<h3>Divisional detail&nbsp;— Online penetration remains elevated</h3>
</div>
<div id="m_4622534485184451121ijeaj">
<ul>
<li><strong>Homeware</strong>:&nbsp;Same-store, same-day sales (SSS) increased&nbsp;+13% on the prior comparable period, with Textiles and Manchester among standout product categories. On a full year basis total sales (including the extra week) increased +6.9%.</li>
<li><strong>Sporting goods</strong>:&nbsp;Similarly strong&nbsp;with Sporting goods 4Q21 SSS up +11% . On a full year basis total sales increased +8.5%.</li>
<li><strong>Online</strong>:&nbsp;FY21 e-commerce sales increased +80% year on year and represented 19% of total group sales (FY19 11%). We estimate 4Q21 online penetration was 17%, suggesting the&nbsp;lockdown&nbsp;induced lift in online adoption has been relatively sticky, helped by the roll out of click and collect across the store network.</li>
</ul>
</div>
<div>
<h3>BGP FY21 result 16 March</h3>
</div>
<div id="m_4622534485184451121ijuqt">
<p>BGP is set to report its FY21 result on 16 March 2021, and has issued revised FY21 NPAT guidance in excess of NZ$70m, following the strong period. We expect the key areas of focus at the result will be 1) a breakdown of margin expansion drivers, 2) inventory levels, and 3) capital distribution. BGP announced a 6cps special dividend in December 2020. We expect a final dividend of 14cps taking the full year dividend to 29cps (including special), which is a payout ratio of 90% (70% excluding the special).</p>
</div>
<div>
<div>
<div>
<div><strong>Guy Hooper</strong></div>
<div><a href="mailto:guy.hooper@forsythbarr.co.nz" target="_blank" rel="noopener">guy.hooper@forsythbarr.co.nz</a></div>
<div>+64 4 495 5255</div>
</div>
</div>
</div>

Briscoe Group 4Q21 Sales Checkout


RESEARCH&nbsp;INSIGHTS

Briscoe&nbsp;Group (BGP) has delivered yet another stellar quarter with 4Q21 group sales up +18% on the prior year period accompanied by gross margin expansion. Following a strong Christmas trading period, BGP has lifted FY21 NPAT guidance to in excess of NZ$70m. We lift our FY21E NPAT +12% to NZ$72m. BGP has&nbsp;benefitted&nbsp;from a buoyant consumer backdrop, which we expect to continue in the near-term, supported by both rising house prices and a reallocation of travel spend with borders remaining closed. As such we also upgrade our FY22 NPAT forecast +26% to NZ$74m, to reflect the expectation consumer momentum remains in place for longer.&nbsp;


Strong Christmas period, margin expansion the highlight


BGP announced 4Q21 sales of NZ$248m, up +18% on the prior year period, albeit bolstered by the inclusion of an extra week. On a same-day, same-store sales basis, group sales increased +12% with both brands strong. Consumer momentum remained strong through the holiday period, with record Boxing and Black Friday sales days. Gross margin expansion was the key highlight through FY21 as the combination of a motivated consumer and tight inventory positions lowered discounting activity. BGP has made a number of small tweaks to its discounting tactics, which are likely to deliver more enduring margin expansion. In addition, we understand supply chains&nbsp; and therefore inventory levels remain tight, albeit comfortable, supporting a continuation of favourable gross margin.


Divisional detail&nbsp;— Online penetration remains elevated



Homeware:&nbsp;Same-store, same-day sales (SSS) increased&nbsp;+13% on the prior comparable period, with Textiles and Manchester among standout product categories. On a full year basis total sales (including the extra week) increased +6.9%.
Sporting goods:&nbsp;Similarly strong&nbsp;with Sporting goods 4Q21 SSS up +11% . On a full year basis total sales increased +8.5%.
Online:&nbsp;FY21 e-commerce sales increased +80% year on year and represented 19% of total group sales (FY19 11%). We estimate 4Q21 online penetration was 17%, suggesting the&nbsp;lockdown&nbsp;induced lift in online adoption has been relatively sticky, helped by the roll out of click and collect across the store network.



BGP FY21 result 16 March


BGP is set to report its FY21 result on 16 March 2021, and has issued revised FY21 NPAT guidance in excess of NZ$70m, following the strong period. We expect the key areas of focus at the result will be 1) a breakdown of margin expansion drivers, 2) inventory levels, and 3) capital distribution. BGP announced a 6cps special dividend in December 2020. We expect a final dividend of 14cps taking the full year dividend to 29cps (including special), which is a payout ratio of 90% (70% excluding the special).




Guy Hooper
guy.hooper@forsythbarr.co.nz
+64 4 495 5255




Briscoe

Briscoe Group: 4Q21 Sales Checkout