Forsyth Barr broker Suzanne Kinnaird said Hallenstein Glasson was the top performer but first prize would be taken by Restaurant Brands, the only retailer still to report.
Restaurant Brands’ first-half result on October 19 would include a first-time contribution from Hawaii and a full period for KFC Australia, both of which would boost headline growth.‘‘We expect strong momentum to continue in its anchor KFC chain in New Zealand — the key earnings driver.’’Given the significant change under way, there was a risk to Forsyth Barr’s estimates for interim splits, she said.
The key focus was any update on the full-year guidance.‘‘We are looking for further expansion plans in Australia and potential timing, an update on KFC margins and early insight from the new format KFC store.’’Reviewing the performance of the companies which had reported so far, Ms Kinnaird said The Warehouse Group was the only blip on the score cared.
Stronger than expected second-half sales were not sufficient to offset a weak 2016 Christmas season.
Strong double-digit growth at Hallenstein Glasson followed a turnaround at Glassons.
Kathmandu delivered another year of impressive execution.Strong growth in Michael Hill International’s core business outweighed losses for its new brand, Emma & Roe, and Briscoe Group bucked its longstanding trends with a slow down in growth due to margin contraction.
Balance sheets remained in the spotlight for retailers, Ms Kinnaird said.
On the positive side, Kathmandu reported a material reduction in gearing — better than Forsyth Barr expected. The reduced debt/asset ratio was driven by improved inventory management.
Meanwhile, Michael Hill’s tax settlement early in the 2017 financial year led to a lift in gearing, although it removed a key overhang. Adjusting for the overhang, cash flow was strong.
The retail sector delivered dividend growth but reflected company-specific factors.
Yield expectations for the sector remained at about 6%, she said.
