I think we're a few minutes early, but never mind. It's delightful to have you all here today, so thank you very much for coming. [Foreign language]. It's such a beautiful morning and wonderful to be together. My name's Rosanne Meo, and I have the privilege of being the chair of the Briscoe Group. On behalf of the board, I'm really very pleased to welcome you to our company's annual shareholders' meeting for the year ended 25th of January, 2026. Today's meeting's being held both here in person at the offices of Simpson Grierson in Auckland and online via the virtual meeting platform. We're delighted to have you, our fellow shareholders, joining us in both these formats. Thank you again, Andrew, to Simpson Grierson for once again hosting us this morning. It's much appreciated.
Joining me today, of course, are my fellow directors, Rod Duke, Tony Batterton, Mark Cairns, Mark Callaghan, and Andy Coupe. Do you want to say anything or do you think we know enough about you all? Go on. All right. Right. Well, Tony and Mark Cairns will obviously be speaking during the process of election. Also seated at the table are members of our executive leadership team, Geoff Scowcroft at the end, our Chief Financial Officer, Andrew Scott, Chief Operating Officer. Other members of our senior management team are here today, Isabel Campbell, who will be speaking later during the presentations, Sam Aitken, GM Retail Operations, James Baillie, Merchandise, Darren Porteous, Sam Bruton, Internal Audit Manager, and our marvelous Board Secretary, and Shaun Lynch. Who are Yes, they're here. Yes, and Amanda de la Tour too as well.
Yes, thank you all for coming. It means a lot to us. We're also pleased to have representatives of our auditor, PricewaterhouseCoopers, and our legal advisors, as I said, from Simpson Grierson. Notice of meeting. The formal business of the meeting is set out in the notice of meeting, which has been circulated to you all as shareholders, and I propose to take the notice of meeting as read. Satisfied that we've got a quorum is present, Geoff, in accordance with the company's constitution, and I now declare the meeting open. I don't think we've received any apologies. No. No. Good. For the agendas and the meeting process, we'll have the chairman's review, the managing director's review. In the course of these addresses, you'll be hearing from three of our key leaders, Geoff and Andrew and Isabel.
After that, we'll proceed to the review and consideration of the financial statements, consideration of the resolutions that you've already been circulated with and any general business. As you know, voting on all resolutions will be conducted by way of the poll. Shareholders attending online be able to vote using the electronic voting card. That's available on the virtual meeting platform, of course. Shareholders may ask questions from either the floor or online, that you identify yourself, and there will be the opportunity to ask questions following the managing director's address during consideration of the financial statements and, of course, again during general business towards the end of the meeting.
Proxies have been received in respect of 184,542,595 shares, representing 82.83% of the company's issued capital. As indicated on the proxy form, I intend to vote all undirected proxies I have received as chairs. I have voted in favor of each of the resolutions being considered today. For your information, I am holding up to 47,468 undirected proxy votes. Voting will remain open for a short period after the close of meeting to allow time for all votes, and particularly including those online, to be lodged and compiled. Final results will be released to the NZX and ASX after the meeting. I think the proxy votes are going to be there. You will see them all displayed on screen.
It's now time to turn to my review on behalf of my fellow directors, and it's a real pleasure to present the review of the company's progress over the past year. Annual meetings are a really important opportunity for all of us as shareholders to hear directly from the board and management about the performance of the group, the environment in which we're operating, and how we are positioning the business for the period ahead. The year ended 25th of January 2026 was another demanding year for New Zealand retailers and for businesses across the board. While there were encouraging signs as the years progressed, it was marked by continued pressure on discretionary spending, heightened cost volatility, and a general sense of uncertainty that's influenced both by consumer behavior and business decision-making.
More recently, as we're all well aware, global events have added hugely to increased volatility and uncertainty, reinforcing the need for disciplined execution and prudent risk management. In an environment where most retailers face declining volumes, margin pressure, and constrained balance sheets, delivering consistent outcomes required both operational strength and careful judgment. At a high level, the group achieved record sales. We continued to invest heavily in future capability and did so while maintaining a strong balance sheet and prudent financial discipline. These outcomes matter, not because they suggest the environment was easy, but precisely because it was not. Before I go further, I want to take a moment to acknowledge our people. Throughout the year, our team in stores and the distribution center, in our support offices, have continued to operate in a very demanding environment.
Cost of living pressures, changing customer expectations, and challenging trading conditions require adaptability, resilience, and professionalism. On behalf of all of my fellow directors, I want to thank everyone across the group for your contribution over the year, and particularly the leadership of Rod and Andrew and Geoff. Turning now to performance. As you will have seen from our reporting, total group sales for the year reached NZD 798.8 million, a new record for Briscoe Group. While the growth was modest, achieving record sales in the context of the economic conditions experienced during year-end of January 2026, it's not something that the board takes lightly. Trading conditions were uneven, competitive intensity remained elevated, and consumer behavior remained highly value-focused. That environment places pressure on both volumes and margin and requires careful, disciplined decision-making.
The board was closely engaged with management throughout this year as those trade-offs were navigated. While the board remains focused on our performance, and in particular financial outcomes, we're equally attentive to the quality of our outcomes. That means not just what the business delivers in a given year, but how it does so with appropriate investment, balance sheet strength, and continued commitment to long-term value. An important component of shareholder value remains dividends. During the year, the board declared a fully imputed interim dividend of NZD 0.10 per share and has resolved to pay a final dividend of NZD 0.10 per share. This brings the total dividend of the year, obviously, to NZD 0.20 per share, consistent with our prior year. The board is pleased to have maintained dividends at this level while continuing to fund the group's largest-ever investment program.
This outcome reflects our confidence in the underlying strength of the business, our disciplined capital management, and our commitment to balancing shareholder returns with long-term investments for sustainable growth. A defining feature of the year ended 2026 was the continued execution of the Group's largest-ever investment program, most notably the new distribution center at Drury. It's just so exciting. The project is central to the Board's long-term view of how Briscoe Group strengthens its supply chain capability, improves service levels, supports growth, and positions our business for the next phase of retail evolution in New Zealand. I would also note that the Board remains conscious that investment during a period of economic uncertainty requires very careful judgment. It's precisely for this reason the balance sheet strength has remained a priority. The Group's financial position continues to provide flexibility and resilience as we move through the current cycle.
At this point, I'd like to invite our Chief Financial Officer, Geoff Scowcroft, to speak to you in more detail about the group's financial performance for the year and the economic environment in which we've been operating. Geoff, over to you.
Thanks, Rosanne. Good morning, everyone. As in previous years, I want to begin this morning with a brief overview of the broader economic environment before turning to how those conditions shaped Briscoe Group's financial performance for the year ended January 2026. As we know, the year was again a demanding period for the New Zealand economy and particularly for retail. It wasn't simply a continuation of the prior year's experience. It was characterized, I think, by a growing disconnect between easing conditions in some of the macroeconomic indicators that were out and the lived experience of households. Consumer confidence remained fragile throughout the year. Households continued to prioritize essential expenditure, remained highly value-focused, and were increasingly deliberate about discretionary purchases. For retailers, that translated into cautious demand, a sustained competitive intensity across much of the year.
Against that backdrop, economic growth Forward helps, not backwards. That remained pretty uneven across 2025, closing the December quarter, only 0.2% of the previous December quarter. Indeed, similarly, at only 0.2% for the full year. The labor market softened with unemployment rising over the course of the year, adding further uncertainty for households, even noting the very slight decrease to 5.3% that was announced only yesterday.
Inflation remained a defining feature of the economic backdrop, and while we entered the year relatively subdued at 2.2%, it didn't take long for pricing pressures to emerge again, with inflation finishing the year at 3.1%, just outside the Reserve Bank's 1%-3% range, and with the balance of risks pointing to further upward pressure. Similarly, while interest rates trended lower over the year, they didn't unequivocally translate into a meaningful recovery in consumer spending, and again, with current events likely to move up to combat inflationary pressures. The New Zealand dollar, unfortunately for importers like us, remained relatively weak through much of the year, really rising above NZD 0.60, and continued to place pressure on the cost of imported goods. Against that backdrop, how did Briscoe Group perform?
As you've already heard, for the year ended January 2026, the group delivered record total sales of NZD 798 million, an increase of just under 1% on the prior year. Both trading segments contributed to that outcome, with homeware sales increasing by 1.4% and sporting goods delivering more modest growth of 0.06% despite challenging conditions. Headline of sales growth was constrained, achieving a new record level of sales in that environment, as Rosanne said, something we're really proud of. Trading conditions were uneven across the year, as you can see here from our quarterly sales, with the first half requiring a higher level of promotional responsiveness to support sales.
In the second half, as conditions stabilized modestly, we were able to sharpen promotional execution and take a more disciplined approach to margin investment. Online sales continued to grow as a proportion of group sales, reaching just over 20% for the year. Importantly, that growth was achieved alongside physical store sales growth, reinforcing the strength of our omnichannel model. As always in retail, and I know you've heard me say it before, one of the central challenges is balancing sales performance with gross margin discipline. For the year to January 26, gross margin closed at 39.2%, down 114 basis points on the prior year. While margin pressure remained throughout the year, its trajectory was encouraging.
As this graph shows, the rate of margin decline in the second half of the year was roughly half of that experienced in the first half, reflecting a more stable trading environment and our ability, as I just said, to be a little bit more controlled with how we invested margin. Cost control remains absolutely critical throughout the year. Total store and overhead costs increased by only 1.2% compared with the prior year, despite ongoing wage inflation and continued cost pressures in areas such as occupancy, power, freight, and systems investment. Delivering that outcome required disciplined prioritization and a continued focus across the business on operating efficiency. Reported net profit after tax for the year was NZD 59.2 million, compared with NZD 60.6 million in the prior year.
While slightly down year-on-year, we think this represents a resilient result given the trading conditions experienced, delivered alongside record sales and continued significant investment. Turning to the balance sheet, this remains a real strength for the group. Cash and bank balances were NZD 130.3 million at year-end, with no drawn term debt. As is typical, around NZD 30 million of credit payments included in trade payable balance were settled shortly after balance date. During the year, the group invested NZD 50.4 million of capital expenditure, obviously supporting the new distribution center program, but also alongside ongoing store development activity and systems investment. That compares with NZD 58.2 million in the prior year, reflecting the group's continued commitment to a period of elevated capital expenditure across a multi-year program.
As the distribution center project moves into its final stages, we expect a further NZD 57 million of capital expenditure in the current financial year, with the focus now shifting from construction into commissioning, testing, and operational readiness. To support the increased investment and seasonality of cash flow, funding facilities were established during the year, with modest drawdown expected to commence later this year, and increasing drawdowns throughout next year. Inventory closed the year at NZD 90.8 million, almost NZD 9 million lower than the prior year, reflecting sustained focus on both the quantity and quality of stock, which remains central to managing margin, cash flow, and promotional flexibility. Now, just before I wrap up, I do want to touch briefly on two areas of investment that are important as we look ahead. No, one of them isn't the new DC.
Andrew's gonna wow you with that shortly. The first I want to touch on is actually artificial intelligence or AI. At the moment, it feels like AI is everywhere. In the news most days and not far behind in what seems like almost every conversation, business or otherwise. Like most businesses, we're often asked about what we're doing with AI. The answer is quite a bit, but in a very practical, we think Briscoe's way. Our focus is certainly not on technology for technology's sake, but on using AI to remove friction from everyday work and help our people spend more time on activities that will add real value. Teams are already using AI tools for analysis, reporting, planning, problem-solving, with a strong emphasis on practical job-specific applications. We're also seeing encouraging examples in the operational space, including pilots providing store teams with fast, standards-based feedback.
For example, visual merchandising. Importantly, we are taking a considered and responsible approach with tools operating inside appropriate enterprise guardrails. The second area I want to touch on relates to our core financial and merchandising system, SAP. All SAP customers worldwide are required to transition to a new SAP platform known as S/4HANA. This program is central to ensuring the group's core systems remain supported, secure, and sustainable over the long term. Look, it's not the most glamorous topic, and you're unlikely to see it trending on social media, even if our effervescent Briscoes lady gave it her full enthusiasm. It is essential work. We're working toward transitioning by the end of this calendar year, and while much of this work happens behind the scenes, it does underpin financial integrity, supply chain execution, data quality, and future automation.
Now in closing, while the recent year was again a demanding one, the operating environment we all know, and this remains highly fluid. What's in our control informs how we respond, and that means maintaining financial discipline and executing carefully as the business moves from a period of elevated investment into one focused on delivery and value realization. We are under no illusions about the challenges that remain, and at the same time, the group enters this next phase with a strong balance sheet and a major strategic investment moving into its operational phase. This positions Briscoe Group well to navigate what lies ahead. Thank you.
Thank you, Geoff. You can see FY 2026 was quite some year, so is the coming year. It was a year that required careful balancing between supporting sales, managing margin pressure, exercising cost discipline, and as we've said, the continued an elevated level of strategic investment. We are, as a board, really satisfied that management's approached those challenges thoughtfully and with a clear line of sight to the group's long-term objectives. From a governance perspective, the board remains highly engaged throughout the year. In a period of volatility and change, strong governance is not about reacting quickly, but about making considered decisions, understanding risk, and maintaining consistency of direction. The board's focus remains firmly on performance, risk management, our people, and ensuring the capital is deployed appropriately and responsibility. We've also continued to review and strengthen our approach to risk management across the group.
Supply chain resilience, cybersecurity, workplace safety, and cost inflation all remain areas of active oversight. While the backdrop continues to evolve, the board is comfortable that the group has processes and capability in place to identify and manage these risks as they arise. People capability, of course, also remains central to the group's success. Retail continues to change rapidly, you'll hear more about this shortly, to technology, to the way data and insight informs decisions. Ensuring that the group attracts, develops, and retains the right talent is therefore an ongoing priority for both management and the board. An example of this was the appointment recently of Samantha O'Regan to the GM operations role. With more than 25 years of major national, international retail chains, Sam brings a wealth of leadership and operational experience, which continues to strengthen the depth and capability of across our organization.
Sam, do stand up and make yourself known to us all. We're delighted to have you as part of the team. I can't quite believe that she told me it's only three months next week or something. Seems you've been with us forever, thank you, Sam. In the context of change, I also want to acknowledge the changes to the composition of our board. As you're aware, Andy Coupe will retire as a director at the conclusion of this annual meeting. Andy, as we said last night, has made a valuable contribution to this board during his tenure, and he served as chair of the Human Resources Committee, where his oversight and leadership have supported the group's people, our remuneration and governance frameworks.
Andy, on behalf of the board and shareholders, I want to thank you for your 10 years as a director and wish you all the very best for the future. Thank you, Andy.
He's a great one for picking up on details. Rod was saying last night that he expects to get regular texts about where we've made a grammatical mistake in any of our publications.
He'll keep us on our toes, I know that. I also want to acknowledge the board's appointment of Mark Cairns as an independent director, which was effective from 1 November 2025. As outlined in the notice of meeting, Mark will speak to this later, he brings extensive experience across logistics, infrastructure, complex supply chains, and capital-intensive operations, having previously held very senior executive roles, including chief executive positions at Port of Tauranga, Toll Owens, and Owens Cargo Company. Later in the meeting, shareholders, you will all, of course, have an opportunity to consider the election of Mark alongside Tony Batterton as part of the formal business of the meeting. The board brings a diverse range of experience and perspective, and I'd like to thank each of you for your contribution throughout the year. It's been another demanding year.
Succession planning and leadership development remain key areas of focus for the board, including ensuring that we have the right leadership depth and continuity. Later this year, the board will undertake a process to select a new director and the new chairs. My final term as a director will conclude at this time next year. Looking ahead, it would be unrealistic to suggest that the challenges facing retailers have dissipated. If anything, the environment continues to become more challenging. The external environment has become even more unpredictable, and we're seeing early impacts of a number of factors, largely outside of the control of individual businesses, probably individual economies, but they shape the conditions in which we operate. What is within our control is how we respond. Staying close to our customers, executing with discipline, and continuing to invest where it strengthens the business for the long term.
The board is confident that Briscoe Group is well-placed to navigate the period ahead. We have entered this new financial year with a strong balance sheet, improving inventory quality, as Geoff has outlined, a major strategic investment nearing operational delivery, and a clear, disciplined approach to execution. Retail is cyclical. Periods of pressure are invariably followed by periods of opportunity, and our focus remains on ensuring that the Briscoe Group emerges from this phase stronger, more capable, and well-positioned to create long-term value for us all as shareholders. On behalf of the board, thank you again for your support. Now, that concludes my remarks, and I'm more than happy to hand over to our managing director, Rod Duke. Thank you, Rod.
Thank you, Rosanne, and thank you for everyone for joining us today, both in person and online. As the Chairman has outlined, FY 2026 was another demanding year for the retail sector. From my perspective, the most notable feature of the year was the consistency and discipline with which this business was run in what remained a very challenging and, at times, unpredictable operating environment. Geoff Scowcroft has already spoken to the financial outcomes and the broader economic context. I won't repeat that detail this morning. Instead, I want to focus on how the business performed operationally, the progress we made against our key strategic priorities, and what positions us well as we move into the next phase. From an operational standpoint, achieving record sales in FY 2026 was not straightforward.
Customer behavior remained cautious, promotional intensity across the sector stayed very elevated, and cost pressures continued to influence pricing and margin decisions. In that context, the outcome reflects the strength of our dual-brand model, the breadth of our multi-channel platform, and the way our teams adapted to changing conditions right across the year. Online continued to play an increasingly important role in the business, accounting for just over 20% of group sales. More importantly, the integration between stores and online continued to improve. A significant achievement during the year was the re-platforming of our front-end online experience onto Adobe. This was a substantial and complex piece of work delivered while maintaining continuity of trade. Our stores remain central to the group's strategy, and FY 2026 saw continued progress across store development.
One of the highlights was the launch of our first Rebel X store, which represents an evolution of the Rebel format. Rebel X provides an expanded range, a more immersive customer experience, and allows us to showcase brands and categories in a way that better reflect how customers engage with sporting goods today. While still early, the store is already providing valuable insights that will inform future store design and development decisions. You'll hear more from Isabel on both the new online platform and Rebel X very soon. Won't they? A key operational focus throughout the year was inventory quality, improving flow, reducing aged stock, and ensuring availability where and when it matters most. This work sits alongside improved planning, better data, and more disciplined execution across buying and replenishment cycles.
The improvement we saw through the second half of the year was encouraging, and those operational improvements were important contributors to the margin performance. Geoff has already outlined none of this happens without our people. Once again, I want to acknowledge the commitment, resilience, and professionalism of our teams across all stores, distribution centers, and the support office. Full year 26 required adaptability and focus, and I'm proud of the way our people continued to deliver under pressure. We continue to invest in training, leadership development, and the capability across the business. Retail continues to evolve rapidly through technology, customer expectations, and operational complexity, and ensuring we have the right skills and depth in place remains essential. Looking beyond the day-to-day operations, the year was also a significant one in terms of strategic delivery, particularly our investment in the North Island distribution center at Drury DC.
The project has progressed well and remains as we keep saying, on schedule and within budget, and is now moving from construction into commissioning. This transition from build to delivery is a significant milestone for the Group. From an operational perspective, this facility will fundamentally change how product moves through this business. It will enable more efficient replenishment, reduce pressure on store back-of-house space, improve availability, and support better use of labor. Alongside this, we have continued to invest in digital capability, data, and analytics. These investments are already supporting better decisions, better decision-making across merchandising, pricing, and promotions. They will increasingly underpin how the business is run in future years.
At this point, I'd like to invite our COO, our Chief Operating Officer, Andrew Scott, to speak to you in perhaps a bit more detail about the group strategy program and key operational initiatives. Thanks, Andrew.
Thanks, Rod. Good morning. It's great to be here today. With a backdrop of economic challenges, unprecedented global volatility, and significant pressure on customer sentiment, we delivered another record sales year. Our teams continue to stay focused on factors within our control and delivering the highest retail standards. Alongside this, they balanced delivering against our strategic commitments and most importantly, looking after our team and our customers. Looking beneath the financials, the health indicators of the business are very strong. We've bolstered our leadership capability, achieved record customer satisfaction scores, and increased our team engagement. This year, with the completion of our new Drury distribution facility, we have exciting new strategic capabilities. These will make us stronger than ever before and ready to capitalize on a market recovery and ultimately unlocking our growth potential.
After nearly four years in the planning, it's fantastic to see the new facility come to life. Our largest ever capital investment is on time and in budget. Darren and the team continue to do a fantastic job on delivering on this project. With the opening of the DC this week, we are well-placed to deliver on maximizing our potential within the store network. The new facility delivers five times the capacity of the previous site in Wiri and has been designed to drive the next decade of growth. It will deliver supply chain, DC, and online efficiencies, and it allows to grow at scale without proportional cost growth. With a faster response time, inventory will be distributed closer to the customer demand and will drive world-class support for our frontline store teams.
The final key milestone will come at the end of this year with the completion of the automation build. Once it's fully commissioned, the automation volume will ramp up in 2027. Our priority to unlock the growth is to maximize the internal opportunities within our store network. Whilst our store network is mature, it still has an abundance of opportunity within it. Our first goal is to drive improved returns on the existing space. As I mentioned last year, we have over 220,000 sq m of space across 90 stores. We'll focus on delivering productivity per sq m and driving incremental sales, increase in margin, and profit returns. This low-risk strategy will be quicker to deliver value in what is still a volatile retail environment. How will we do this?
Through smarter AI-driven replenishment, we will reduce the stock in store by around 20%. We'll also reduce double handling and allow us to provide world-class customer service, ultimately making it easier for our customers to shop. In parallel, we'll also reduce stock-outs and deliver stronger on-shelf availability, therefore improving conversion and product sell-through. We'll try and increase sales density through better retail execution and improving our visual merchandising standards through better presentation to show off our fantastic product ranges. How will we leverage our co-location strategy? We have 5 locations where we have a Briscoes store but no Rebel store. With the new capabilities of the Drury DC and ability to trade those stores with much lower inventory, this opens up an opportunity to open Rebel stores within that existing Briscoes space. An example of this is in Briscoes Upper Hutt.
Later this year, we will refurbish the store and open a new Rebel store within the existing Briscoes space. This is an exciting project and one that will deliver on many fronts. It will drive increased footfall to Briscoes and also incremental Rebel sales with no additional lease costs. The store refurbishment will start later in the year and open in early 2027. There's also a handful of stores where we have both a Briscoes and a Rebel store. Once we reduce those stock levels, we will likely have surplus space that we can sublease to create brand-new income stream and reducing our total operating cost. An example of this would be Briscoes, Papamoa. For those of you who know the store, it's a 4,000 sq m store, but also has 1,100 sq m of stockroom at the back.
The store is only 30 minutes from the new DC. In future, will be getting daily driven, demand-driven replenishment. Therefore, we can reduce the size of the stock room significantly. As you can imagine, we've received a lot of interested parties to take this new additional retail tenancy. We are very close to finalizing a very exciting partnership, which we're hoping to share in the next few weeks. As I mentioned last year, we've been reviewing the opportunity to open smaller metro format stores. We've now completed the review. We've decided to deprioritize this to focus on maximizing the existing space we have before looking at new sites. With the new DC, we'll have the capability to open Rebel stores like the one in Upper Hutt and other smaller catchments.
We continue to monitor new and growing opportunities, and we're really excited with the land that we've secured at the new Drury Town Centre development. We will build a new Briscoes and Rebel dual site. The outlined site is very flexible and will also include third-party retail space, again, generating incoming revenue from the development. The build process is likely to start in 2028 and therefore have lots of time for us to really maximize the floor space and to really trial those different store formats. Once we have exhausted our internal space, we'll refine those small format concepts. We will look to smaller catchments for further store growth. Ultimately, our goal with the formats is to lower the effective occupancy per dollar of sales over time whilst maximizing market share.
As I've outlined today, with the enhanced capability that the new DC offers, we are entering a very exciting phase of growth with multiple opportunities that we will progress over the coming years. We are better placed than ever, and I'm very confident that as the market stabilizes, we will return to growth, providing better returns from existing leasehold and owned space. With multiple streams of opportunity running in parallel, benefits will compound as initiatives scale across the network. We will deliver cost efficiencies, increased sales, and margin delivery. This coupled with disciplined cost management, will ultimately result in bottom line growth and providing a more productive and resilient business over time.
I'll now hand you over to Isabel, who'll give you an update on some of the exciting projects we've completed in the last year to deliver on our promise to deliver the best retail experience in New Zealand.
Thank you. Thank you, Andrew. Good morning. This year, our focus has been clear: to deliver against our group strategy by improving how customers experience our brands, both digitally and in store. We've made strong progress, particularly through the investments we've made across our digital platforms and our physical store environments. We've successfully deployed our new websites, improving speed, usability, and enhancing the overall customer experience across both Briscoes Homeware and Rebel Sport. Alongside this, we brought our new direct-to-customer marketplace and platform live. This significantly expands our online range and accelerates how we can respond to customer demand for longer tail products and strengthen our ability to deliver greater choice to them. At the same time, we've enhanced the in-store experience.
At Rebel, we've delivered a step change for Rebel X, which you'll see the photos up there, including the opening of our flagship store, now the largest sports retail store in ANZ, and introducing a number of first to New Zealand in-store experiences. This creates a more immersive, modern, and experience-led environment that better reflects how customers want to shop today and how the brand continues to evolve. Building on this, we are now looking to create the homewares equivalent at Briscoes, with planning underway for a more experiential store format that brings our product to life in new ways for customers. Importantly, these initiatives are helping us to deliver a more seamless and connected experience across channels, and they are being recognized by our customers.
Online now represents approximately 1/5 of total sales, and we have achieved record store network Net Promoter Scores across both brands, reflecting stronger satisfaction and improved ease of shopping. This is a clear signal that our strategy is working. We are really excited for the future. Beyond the experience itself, we've focused on deepening our direct relationship with customers. Our VIP clubs continue to grow and are increasingly central to our customer ecosystem, enabling more personalized data-led engagement and allowing us to communicate with customers in more relevant and meaningful ways. These customers are highly engaged, shop with us more frequently, and represent a significant and growing contribution to overall sales. We've also continued to evolve our loyalty approach at Rebel with a clear focus on rewarding our most engaged customers and strengthening long-term connection with the brand.
This includes planning to launch a new reward system where customers are rewarded for every NZD 300 they spend, designed to increase shopping frequency and drive higher basket value over time. Together, these initiatives reflect a deliberate shift from transactional retail to relationship-based retail, where we build deeper connections, increase customer lifetime value, and create a more resilient customer base. The progress we've made is not only reflected in how customers experience our brands, but also in how we shop in the communities they are part of. Increasingly, customers are choosing brands that reflect their values. This is an important part of how we continue to build relevance and trust. At Rebel, we've continued to invest in initiatives that make sport more accessible.
Through our Pass it Forward program, we've provided balls and equipment to communities and schools, helping more young New Zealanders get active and participate in sport. We've also continued to support our communities through scholarships and grants, with NZD hundreds of thousands contributed since the program's inception, supporting individuals, teams, and local organizations. These initiatives are a really important part of how Rebel connects with its community and builds long-term relevance beyond the store. At Briscoes, we've also taken steps to introduce more product-led community initiatives. This year, we launched our Buy a Blanket, Give a Blanket partnership with The Salvation Army, providing practical support to those who need it most, particularly during the colder months. Importantly, this is just the beginning. We see further opportunity to build on this approach over time. These initiatives are not separate from our customer strategy.
They reflect what matters most to our customers and play an important role in building trust, connection, and long-term loyalty. It also doesn't mean that we're stepping away from our sales promotions on Briscoes, something that we're really proud of and famous for. In summary, we've made strong progress in delivering against our customer strategy. We have invested significantly in technology and customer experiences, and we are seeing those investments translate into improved customer outcomes. Thank you. Back to you, Andrew.
Thank you, Isabel.
Thanks, Isabel. To land two new websites and a brand-new concept at Rebel, which hopefully some of you have managed to see, was by no mean feat, and both the store and the websites have been really well received by customers. Very exciting times ahead with the launch of the new Rebel loyalty scheme, an initiative that not only will act as a defensive tactic, but also allow us to make a way to really leverage the leading market share that we have. We can only deliver this level of strategic change alongside market-leading trading performance due to the high quality of our team. I'd just like to take a moment to thank everyone for their massive effort in what was a very volatile and demanding year. I look forward to the year ahead and unlocking some of the value from the previous year's investment.
On that note, I'd like to hand back to Rod. Thank you for your time.
Plenty been happening. You're right, Isabel, those great sales, they won't stop coming. Thanks, both Andrew and Isabel. A great overview of the work, sorry, that we've undertaken and what will enable us in the coming years. Before closing, I want to say just a few words about the year that has just begun. The external environment clearly remains highly fluid, you will note by my comments accompanying the first quarter sales update last week. In recent months, the conflict in the Middle East has added a layer of further uncertainty, impacting freight markets, fuel pricing, currency volatility, and broader global confidence. These factors inevitably flow through supply chains and influence import costs, input costs, and consumer sentiment.
Should geopolitical tensions continue to ease over the next few months, we are cautiously optimistic that the recovery which was beginning to emerge as we commenced this current year could resume, supporting a return to a more normal and favorable retail environment throughout the second half of this year. What gives me confidence is the strength of the foundations now firmly in place. Strong and trusted brands, a highly capable team, a disciplined operating model supported by major strategic investments that are now nearing delivery. Importantly, we have a proven track record of delivering not just against our key financial and operational metrics, but also against complex multi-year initiatives delivered on time and, in many cases, under budget. Achieving that level of execution in what is undeniably one of the most challenging periods facing retail in most recent decades is something we're very proud of.
As Rosanne noted, retail will always be cyclical. Our focus is on navigating the current environment effectively, managing cost pressures, responding to cautious consumer behavior, and staying disciplined while continuing to invest in the capabilities that will underpin long-term success. At a time when it would be easy for companies to pause or defer investment, we are deliberately doing quite the opposite, investing for the future across our infrastructure, systems, and operating capability. Finally, I want to thank everybody across the group for their continued effort and commitment. It is their work day in and day out that underpins the performance and progress you've heard about today and that gives us confidence as we look ahead. On that note, I'll hand you back to the chair.
Thank you, Rod and Geoff and Andrew and Isabel. Great presentations. We'll take questions now from you all relating to the company's performance and operations. Just to remind you, any questions relating to specifically to items of the formal agenda should be held over, and you'll have the opportunity to raise them as we take each agenda item in turn. Are there any questions arising from these presentations? No? Okay. We'll now move to the-
I'm sorry.
I'm sorry, Coralie.
It's all right.
Gosh, it wouldn't be the same without a question with you.
No, it's actually just, it's just to say how thrilled I am with Briscoe. I know you don't want me to witter on about IKEA, Rod. I've had the IKEA experience, and I'm just going to say that where your ranges cross over with both IKEA and The Warehouse, it is so much more pleasant shopping at the Briscoes store in Mount Wellington.
Where you can take something off the shelf with a clearly marked price on it, put it in your cart, and take it up to the smiling faces behind the checkouts, who will quickly get you through, and it's a lovely experience. You've got all this to choose from. Just keep doing what you're doing, please. As an older person, I'm now starting to have to replace burnt-out appliances because they're so old. You know, I'm still a good customer, and that's where I like to shop. Thank you. Online too. I've done that too, that's good.
Coralie, that's fantastic feedback, and we do appreciate it. I agree with you. There is a real social engagement in shopping, it's very important how our wonderful team do. We'll pass that on to Leon and the team out at Mount Wellington. That's fantastic. Are there any other questions or compliments?
Rosanne, online.
Right. Good.
If I, if I can address that. We did receive one as part of the proxy process. The question was from John and Margaret Lightfoot regarding the Kathmandu investment. What's the current view of the board on this holding in the near future?
Tony, do you want to handle that one?
Yeah, I'll pick that one up, Rosanne. As many of you will know, Kathmandu recently undertook a capital raising, including rights issue, and we didn't participate in that. That's the second rights issue they've had since COVID. The previous one was in 2020. We didn't participate in that one either. Both decisions were entirely based around where we see the priority for our capital, which is in our two businesses. This coming financial year will be the third year in a row that we've invested greater than NZD 50 million in the fixed assets of our business. That's a moment in time. We won't spend NZD 50 million every year. The biggest item in there is the DC, which has been discussed at length today.
A massive investment in our future, obviously, and various other initiatives. That's where our focus is, and we've been very clear about that. In terms of where to with the Kathmandu investment, the damage has been done in some respects, in that we didn't participate in the 2 rights issues for those reasons. However, we still own the best part of 50 million shares. They have raised the capital. They've done what they've done. They've raised the capital. They maintain they're halfway through their turnaround plan. There's been changes at the board level. We continue to own our shares, and we hope to see as much value created and returned to us in the future for that. We'll continue to monitor it closely.
Thank you, Tony. Thank you. Yes, Geoff, one more question.
A question around the DC and solar on the roof.
Yes
The possibilities of that and what that could mean to energy costs and potentials. I think Andrew.
Andrew, Darren, whoever. Yes.
I'll give you my view, and then Darren can give you the more specifics. There is a solar installation at the DC and also a battery system that's on site to retain the power and then use it at high peak periods and also rainwater harvesting at the site as well. There's many features there of that drive forward our sustainability plan. Yeah.
Darren, do you want to add anything to that?
Just stand up maybe, and so people can hear you at the back.
We're taking the opportunity to move to a fully electric forklift fleet. The LPG machines that we had in our older site will be completely decommissioned when we move fully into the new DC. As Andrew said, our battery energy storage system gets installed and brought to life in the second half of this month. That will enable us to take supply from the grid when there's excess power being generated, store that and use that in peak times when the energy from the grid is more expensive. That buffers from a cost side how the DC will operate, but also does our bit in terms of balancing the load that's on the electricity network in the country.
The site was built with the capability to hold solar panels on the roof. If you're particularly astute looking at that video, you would see that we've got pallets of solar panels sitting up on the roof. They're in the process of being installed by our builder, Calder Stewart. And once that's connected, we'll have supply of that solar energy to add into the mix from grid and the battery systems.
Thank you. Thank you. Geoff, no further questions at this stage.
Sure. Thank you.
All right. We'll now move to the more formal part of the meeting as set out in your notice of meeting, beginning with the review and consideration of the company's financial statements. With your concurrence, I'll take the annual report, including the financial statements for the year ended 25th of January, 2026, together with the directors and auditors report as read. I now formally open the financial statements for discussion. I do ask any questions from you as shareholder in person or online. No questions and nothing online, Sam? No? Good. All right, if there are no questions, we'll proceed to the formal resolutions. The formal resolutions of this meeting, as outlined in the notice of meeting, all voting today will be conducted by poll.
Each resolution is an ordinary resolution and must be approved by a simple majority of votes cast by shareholders entitled to vote and who are voting. Shareholders attending online, please cast your vote using the electronic voting card available within the virtual meeting platform, and voting will remain open until shortly after the close of the meeting. As outlined in the notice of meeting, there are two directors standing for election at this Annual Shareholders' Meeting. Under NZX Listing Rule 2.7.1, a director must not hold office without re-election past the third Annual Meeting following the director's appointment of three or three years, whichever is the longer. In addition, any director appointed during the year by the board must retire at the next Annual Meeting following their appointment, and that is the case in terms of Mark Cairns.
Accordingly, Tony Batterton retires by rotation and offers himself for re-election. Mark Cairns, having been appointed by the board on the 1st of November, 2025, retires at the close of this meeting and offers himself for election. Before moving to re-election resolutions, I wanted to take a brief moment to address a matter the shareholders will be well aware of and has attracted some ongoing commentary, namely the question of director independence and the role that tenure plays in that assessment. We recognize that tenure is a very relevant consideration and one that we as a board reflect on carefully. Under the NZX Corporate Governance Code, it's one factor among several, and independence is not determined by tenure alone.
In our view, experience and continuity when combined with independence of mind and robust challenge are clear strengths in effective governance. In responding to this issue, your board has been encouraged by the strong support received from a number of different stakeholders in the last few months who share this broader principles-based view. In that context, both Tony Batterton and Mark Cairns were recognized, I'd like to note, in Datamine's top 10 directors nationally in December last year, an independent and data-driven acknowledgement of the value they bring through skills, judgment, contribution and certainly to our board. The board remains firmly of the view that each of our nominated directors continues to demonstrate independence of thought, rigor and strong commitment to acting in the interests of all shareholders, and we therefore strongly support and recommend their re-election to you. To the resolutions.
Resolution 1, re-election of Director Tony Batterton. In accordance with NZX Listing Rule 2.7.1, Tony retires by rotation and offers himself for re-election. Tony, I'd like to ask you to address the meeting and say a few words about why you've decided to stand.
Thank you, Rosanne, and good morning, everyone. I'm Tony. My CV is summarized in the notice, and also I've stood up before you on two or three previous re-elections, I won't go through my CV again. I thought I'd use my opportunity just to talk a little bit more about my specific role with Briscoes. As Rosanne's mentioned, I'm an independent director. I'm also chair of the Audit and Risk Committee and a member of the Human Resources Committee. My role with the Audit and Risk Committee is a particularly important one. It covers some very important ground, here's key parts of my role are leadership and technical focus on the financial matters of the business. Examples including our annual results and how our results generally are communicated to the market.
Issues like risk, how we think about risk, how we assess risk, how we reassess risk, how we manage risk. That's a really big topic for us. The role also gets into areas of corporate finance, more, more niche, but treasury and other matters like that. Perhaps it's an age thing. As I get older, I focus more and more on what the personal focus of a role is, as opposed to just purely what's the technical or business focus to a role. I had this list of attributes that I know all of us, you know, look to measure ourselves against, I'll note them down. Certainly, the highest standards of integrity. I think that goes without saying, but I'll say it anyway.
You need to be fiercely independent and objective. You need to have an inquiring mind. What do I mean by that? It's not just a case of reading the papers and having the discussion. It's also about thinking, "Well, what's not on the papers and what's not on the discussion?" Come with a genuinely inquiring mind. We need to bring the benefit of our unique experiences, insights, backgrounds, and contacts, and make sure that you bring that to bear in the discussion and with the business. Again, it goes without saying, but we need good levels of commercial acumen and judgment. You need some humility. That's perhaps not quite so obvious, but it's an important one. You need to be willing to adjust your perspective based on the contributions of respected colleagues.
Last but not least, you need a very positive mindset. Our business operates in a fiercely competitive industry. One of the really toughest. Within that construct, we have an absolutely fantastic first-rate management team. I think Andy mentioned the best he thought he'd work with, if I can repeat that from his speech from last night. You know, that goes for me as well. We have a marvelous management team. We have a very clearly set out strategic plan. We're investing incredible amounts of money in the confidence of our future. We need to bring a positive mindset and support the company to meet its objectives. As Andy also said, it's a privilege to be involved.
I enjoy it immensely. Thank you for your support.
Thank you, Tony. You can see why we're so delighted to support his re-election. I'll now call for any discussion or questions from shareholders in respect of Tony's re-election. If there's no questions, I'd invite shareholders to vote on Resolution 1. Please record your vote for, against, or abstain on your voting card, whether attending in person or online. Okay. Resolution 2, Election of Director Mark Cairns. Mark was appointed to the board, as we mentioned earlier, on 1 November, 2025, and retires at this annual meeting in accordance with NZX Listing Rule 2.7.1. He offers himself for election. The board unanimously supports Mark's election. I would like to invite you, Mark, to address the meeting and say a few words about why you've decided to seek election from shareholders.
Thank you, Chair. [Foreign language]. Good morning, ladies and gentlemen and fellow shareholders. I feel privileged to stand before you today seeking election to the Briscoe Group board. By way of background, I'm an engineer by profession and have completed undergraduate and master's degrees in business and dispute resolution. I'm a Fellow of Engineering New Zealand and a Chartered Fellow of the Institute of Directors in New Zealand. After 16 years as chief executive of the Port of Tauranga, I retired five years ago to pursue a full-time governance career. I'm currently chairman of Freightways and a director of Auckland Airport. I previously served on the boards of Meridian Energy and Sanford. Through these roles, I bring extensive commercial and governance experience, including leading large-scale operations and engaging with capital markets through different economic cycles.
Briscoes is one of our truly iconic companies, having operated in New Zealand for over 164 years. Whilst Rod hasn't been the boss for quite all of that time, I consider that he's developed a fantastic management team with a very strong culture and a clear focus on delivering value to customers and shareholders. Serving as a director on the board of New Zealand's best retailer, thanks, Coralie, would be an honor and a responsibility that I would take very seriously. I therefore seek your support today to serve you as a director. [Foreign language] . Thank you, ladies and gentlemen.
Thank you, Mark. Good. Are there any questions in respect of this resolution? No? I will now invite you as shareholders to vote on Resolution 2. Please record your vote for, against, or abstain. Thank you. The final resolution relates to the continuation of PricewaterhouseCoopers as the company's auditors and authorizing the board to fix the auditor's remuneration for the ensuing year. The remuneration paid to PricewaterhouseCoopers in the year under review totaled NZD 227,000, of which NZD 170,000 was in respect of the company's year-end audit and NZD 57,000 relate to the half-year review. It's the most valuable service that we get from you, and thank you. Now call for any discussion or questions in relation to this resolution in respect of remuneration of auditors. They're obviously supporting us, too. I'd ask you please to record your vote for, against, or abstain.
We'll now collect voting cards. Shareholders attending in person may have their voting cards collected, and shareholders attending online may use this time to submit their electronic voting cards and any general business questions. Are there any general business questions from fellow shareholders here in the, in the room? Geoff and Sam, have we received any further questions online? We'll have to take that as a vote of satisfaction. All collected? Good. If there's no further business, I now declare the annual shareholders' meeting of Briscoe Group Limited for the year ended January 2026 closed. Thank you to all of you as our fellow shareholders for your attendance today, both online and in person. We really do appreciate seeing you here each year and your commitment and contribution to us as a company. Thank you very much indeed. Declare the meeting closed.