Jeremy Hutton: Milford Asset Management Equities Analyst on Briscoe Group sales dropping

Briscoe Group sales fell 2.58 percent on the year to $178.3 million in the first quarter, weighed down by weaker homeware sales.

Briscoes Homeware store revenue fell 4.66 percent to $103.6m compared with the first quarter last year, while Rebel Sport’s revenue grew 0.47 percent to $74.7m.

Milford Asset Management's Jeremy Hutton explains further.

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Episode Transcript

Speaker 1 (00:00):
Now, Jeremy Hutton Milford Asset Management is with me right now, Hey, Jeremy,
good evening hither Now, what did you make of the
COMMUS Commission clearing Contact Energy's acquisition of Manowa Energy.

Speaker 2 (00:11):
It was somewhat surprising news this morning with the COMMICS
Commission approving their acquisition ahead of schedule. So for reference,
Contact Energy, they're one of the big four electricity gent
tailors and they applied last year to acquire Manoa, who
are the fifth largest player in the generation market. So
there is a key difference between generation and the retail market. Now,

(00:32):
a large generator el Gent Taylor acquiring a smaller player
on the surface could make people a little bit nervous
from a competition perspective. But the COMMAS Commission went away,
they did their analysis and review and they said today
that they were satisfied that the acquisition is unlikely to
lessen competition in the retail market and then also unlikely

(00:53):
to push up electricity prices for consumers.

Speaker 1 (00:55):
So that would imply that increased regulation for the electricity
sectors low, Yeah.

Speaker 2 (01:01):
I'd say unlikely. I mean the pressure is always going
to be on for more regulation, and the commist Commission
did point out in its release that they still have
some concerns about lack of competition in the market, and
there are still a number of reviews underway which the
Commist Commission is a part of. But under the law
and under competition law, if the Commission did their analysis

(01:22):
and they believed that the deal wouldn't reduce competition, then
they really have no option but to approve the transaction. Now,
what I will say is that politicians, they're always going
to have a view on this, and we are heading
into an election next year and the sector does become
very political, So I do expect a lot more commentary
on this competition in the run up to the election

(01:43):
next year.

Speaker 1 (01:44):
Okay, let's talk about main fright now. Main freights had
a very start, a strong start to the main mouth
what's going on.

Speaker 2 (01:51):
Yeah, so the main freight's year price that had been
hit really hard on fares of lower earnings expectations, and
that's primarily driven from reduced global growth and effectively the
Trump tariff turmoil. Now, main Freight they released a trading
update on Friday and it was a pretty emphatic rebuttal
of some of these market expectations of a downgrade. Currently,

(02:13):
they're only seeing impacts in their Transpacific freight lane, so
that's the China to US freight lane that we're very
familiar with. In the US division as well, now there's
quite a small part of main Freight's earning, so it
doesn't move the dial too much. But most importantly their
Crown Duel divisions, which is Australia and New Zealand, they're
not seeing any impact at the moment, and that was

(02:35):
quite surprising to the market. It took it quite positively
and the share price was up thirteen percent. So if
that contagion doesn't come down to the side of the
world so much and keeps limited to the US, then
the main Freight share price should continue to be very strong.

Speaker 1 (02:50):
And then what about Briscoes. They had a trading update today.
I mean, they had been doing really well, but then
they've taken a has and Q one have they?

Speaker 2 (02:56):
Yeah, one of widely perceived is one of New zealand
leading retailers, and they reported their start of the year
sales numbers and you know, it just continued to highlight
to me how tough the retail market still live in
New Zealand. And then just you know, some of these
green shoots that we've been expecting, you know, continuing to
get pushed out, mainly in their homewere division. You know,

(03:17):
they saw their sales down almost five percent versus last year.
But most importantly they just had some confidence in returning
or stronger profits in the second half of this year
and their forward guidance, and I think a lot of
other retailers in New Zealand will be holding out hope
for that as well.

Speaker 1 (03:34):
Absolutely, Jeremy, thanks as always, this really good stork to you.
That's Jeremy Hutton, Milford Accid Management. For more from Hither
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