BGR - Briscoes Valuation

[jetski1999]

great sale today at manukau briscoes, I wandered in as I was buying something near by to have a look even ended buying some plates. they had all six cashiers working and ladies were buying stacked shopping trolleys of goods. The queue was ten deep, I have never seen that before there, I wondered how many WHS customers are they grabbing

[Sideshow Bob]

Is the dollar about to start squeezing their margins?

[benjitara]

Is the dollar about to start squeezing their margins?

Their margins are amazing currently. Put the sheds to shame....

[QOH]

great sale today at manukau briscoes, I wandered in as I was buying something near by to have a look even ended buying some plates. they had all six cashiers working and ladies were buying stacked shopping trolleys of goods. The queue was ten deep, I have never seen that before there, I wondered how many WHS customers are they grabbing

Yes great sale, but if every shopper was like me I doubt Briscoes made much profit yesterday unless their markup is huge.
Did a quick tally when I got home, original ticket prices on what I bought was approx $140, cost yesterday to me was $39.98.

[winner69]

Yes great sale, but if every shopper was like me I doubt Briscoes made much profit yesterday unless their markup is huge.
Did a quick tally when I got home, original ticket prices on what I bought was approx $140, cost yesterday to me was $39.98.

And Briscoes bought the stuff for $15

So even if the NZD falls a lot Briscoes might have to pay $17 for those goods. They have ticket prices of $170 and you get carried away and pay $49.95 - hey you 'saved' more and Briscoes made more.

Good all round eh

[winner69]

KMD good acquisition for Briscoes? Nobody seems to want to answer that question

One good thing is that a script issue brings Rods share down to 51% odd.

That and the intent to list on ASX will improve liquidity a lot .....and make Briscoes a more attractive market investment. Also a much bigger company.

Wouldn't want to pay too much more than they already offering though.

[macduffy]

Yes, winner, I'm a bit in two minds over that, as well. KMD brings a lot of Aussie exposure with it and NZ companies don't have a good track record there, by and large. WHS, HLG, AIR, Pumpkin Patch - but on the other hand, Rod Duke is a good operator, has a lot of skin in this particular game and is an Aussie! I'll give him the benefit of the doubt at this stage that he'll not overpay and will be prepared to walk away with 19.9%, or a bit more, if the market doesn't like his price.

[benjitara]

I was down at the nzopen this year and noticed Rod Duke had Steve Williams caddying for him. While I believe he won a charitable auction for him to have steve on the bag, it also hits me that Rod probably just wanted to get that little bit more from his golf game too and so coughed up a bit of extra cash to have the golfing brain on the bag. He's a competitive guy I'd imagine. good on him. Any holder of Kathmandu who doesn't want Briscoes shares probably needs to go see a doctor of some variety.

[jmsnz]

This is interesting. I have been a long term investor in BGR, having done well from that investment, and like the way they operate and the strategies they employ. For me a large part of that is Rod and his very clear and direct leadership. KMD on the other hand I have never been so excited about from an investment point of view always seem to struggle really. I can see why BGR think it is a good fit for them though:
1) BGR sells stuff that everyone needs (Is there anyone who has not actually spent money at a Briscoes store?)
2) BGR positions itself as selling stuff that everyone needs but with better quality than the opposition
3) Rebel Sport replicates that position, albeit not quite so universally, in that not everyone buys sporting gear
4) But for those that do the marketing proposition is the same as for Briscoes - a wide range of choice, at a good price/quality point compared with the opposition

KMD is like Rebel, its the place you go to buy outdoor focused stuff at a good price/quality point compared with the opposition. Real enthusiasts don't buy from either KMD or Rebel, they go to specialist retailers for that but I can see that BGR's strategies for getting punters into Rebel will transfer to KMD and likewise with their buying, warehousing and logistics strategies are likely to be complementary.

I can't make the same case for Living & Giving, I have never thought that is a good fit for BGR really.

My concerns would be:
KMD appear to be a large pill for BGR to swallow, just way more stores and geography to cover
NZ Retail companies don't have a great history in expanding outside of NZ
That they have paid too much and cannot get the margin levels that they expect to from the KMD stores

I think that it might be time to consider taking some of my profits off the table, just in case.

[macduffy]

BGR expects to announce another good profit increase next month.

http://www.nzherald.co.nz/business/n...ectid=11584101

Despite Kathmandu's improved performance I'm quite happy that BGR didn't manage to get a bigger chunk of that company.