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Hallenstein Glasson lifts 1H profit 5.9% as cost cutting offsets skinnier margins

Friday 29th March 2019

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Hallenstein Glasson Holdings lifted first-half profit 5.9 percent as cuts to back-office costs offset skinnier margins from clearance sales. 

Net profit rose to $16 million in the six months ended Feb. 1, from $15.1 million a year earlier. Lower administration costs of $12.4 million, down from $14.3 million, helped offset a bigger tax bill of $6.5 million. 

Revenue grew 3.1 percent to $151.2 million but gross margin shrank to 59.7 percent from 61.5 percent, leaving gross profit flat at $90.2 million. The contraction in margin was due to increased promotional sales through November and December. 

"Although the trading environment in both New Zealand and Australia is still challenging, it has been encouraging that group sales for the first seven weeks of the 2019 winter season are 1.5 percent ahead of the same period last year," chair Warren Bell said in a statement. 

The result was in line with guidance given in February. 

The board declared an interim dividend of 20 cents per share, to be paid on April 18, unchanged from a year earlier. 

Bell said the retailer's balance sheet was strong and inventory well controlled. That, combined with the current trading, meant the board could maintain the dividend. 

The shares rose 2.2 percent to $4.65 and are up 10 percent so far this year. 

The retailer's inventory stock was $23.9 million at Feb. 1, up from $18.7 million a year earlier. 

Mary Devine will officially take over the reins as managing director from April, replacing chief executive Mark Goddard, who unexpectedly resigned in February.

Bell said the group will keep focusing on building digital engagement with customers, controlling costs and expanding market share under Devine's leadership. 

Sales in the womenswear Glasson brand climbed 16 percent in Australia to $48.5 million and were up 1.6 percent at $51.1 million in New Zealand. 

"As with last season, the focus will be on fashion, speed to market and customer service to keep the brand in a strong position in both New Zealand and Australia," Bell said. 

Sales were up 1.3 percent at $51.7 million across its Hallenstein stores on both sides of the Tasman.


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