Briscoe Warns of Tough 2025 as Margins Squeeze Despite Stable Sales

Steady Finish to a Tough Year

Briscoe Group Limited has closed its 2025 fiscal year with a cautiously optimistic report, posting a 0.96% increase in sales for the fourth quarter ended 26 January 2025. This growth nudged the company’s full-year sales to $791.5 million, just shy of last year’s record $792.0 million. In a retail landscape marked by economic headwinds, this near-flat performance underscores Briscoe’s resilience.

Both of Briscoe’s core segments, homeware and sporting goods, experienced marginal declines of 0.06% over the full year, reflecting the broader challenges facing consumer spending. However, the company’s intensified promotional efforts in the final quarter helped lift homeware sales by 1.27% and sporting goods by 0.44%, providing a positive end to the year.

Digital Shift Gains Momentum

One of the standout developments is the growth in Briscoe’s online sales, which now account for 19.69% of total group sales, up from 18.72% the previous year. This nearly 1% increase highlights the company’s successful pivot towards e-commerce, a critical channel as consumer habits continue to evolve. Briscoe plans to further enhance its digital platform by migrating to Adobe’s system in 2025, a move expected to streamline the customer experience and potentially drive additional online growth.

Margin Squeeze and Inventory Discipline

Despite steady sales, Briscoe is contending with significant margin pressure. The group anticipates its gross profit margin will fall by around 200 basis points from last year’s 42.40%, though it remains above pre-COVID levels. This margin compression reflects ongoing cost challenges and competitive pricing dynamics in retail.

Inventory management has been a key focus, with closing stock expected to be approximately $5 million lower than the previous year. This reduction, particularly in seasonal sporting goods inventory, suggests tighter control over stock levels and improved stockturn, which could help mitigate margin pressures going forward.

Profit Outlook and Strategic Focus

Briscoe’s net profit after tax (NPAT) is expected to align with prior guidance, excluding a one-off, non-cash tax adjustment of $7.4 million related to changes in tax depreciation rules. This solid profit outlook is notable given the challenging economic backdrop in New Zealand’s retail sector.

Group Managing Director Rod Duke emphasised the company’s commitment to strategic initiatives and investment in business-critical projects, which remain on track and within budget. However, he also cautioned that the retail environment is likely to remain difficult through 2025, with the first half expected to be particularly challenging.

Looking ahead, Briscoe’s strengthened online presence and disciplined cost management position it to navigate ongoing headwinds and capitalise on recovery opportunities when they arise.