Hallenstein full-year profit drops 21% on Glassons Australia loss, weaker menswear

Friday 23rd September 2016

Hallenstein Glasson Holdings posted a 21 percent decline in full-year profit, reflecting a loss from its Glassons unit in Australia and weaker earnings from its flagship menswear chain.

Profit fell to $13.7 million, or 22.93 cents a share, in the 12 months ended Aug. 1, from $17.4 million, or 29.15 cents a year earlier, the Auckland-based retailer said in a statement. Sales rose 0.9 percent to $223.5 million.

Like most clothing retailers, Hallenstein buys in seasonal stock and relies on predictable weather to ensure customers buy its coats in the winter and beachwear in summer. But in the latest winter season, consumers in both Australia and New Zealand basked in what the company called "record mild temperatures", reducing both sales and margins. It also suffered from a lack of leadership at its Glassons womenswear chain before luring back former Pumpkin Patch chief Di Humphries to run the unit last April.

In the first six weeks of the current year, sales are up about 9 percent, Glassons is recovering and "we anticipate a much-improved profit performance for the current trading period," chief executive Graeme Popplewell said.

The biggest deterioration in the latest year was from Glassons Australia, which recorded a loss of $1.9 million, which it blamed on a mild winter and margin pressure, from a profit of $170,000 a year earlier. Sales were little changed at $41.2 million while cost of sales rose 8.2 percent to $17.3 million.

The retailer closed two outlets during the year and said "further store rationalisation is under review where costs and performance fail to meet our criteria". At the same time, three stores were refurbished to a new design and more will be changed out to the new format, while two new stores will be opened before Christmas, it said. So far in the current year, same-store sales were up 13 percent.

Profit at its Hallensteins chain in New Zealand recorded a 4.5 percent gain in sales to $89 million but its gross margin contracted to 57.2 percent from 60.9 percent, which it attributed to the mild winter and a weaker exchange rate, resulting in an 11 percent decline in profit to $8.5 million. Sales didn't grow in the first six weeks of the current year, it said.

Its Storm chain lifted sales by 4.4 percent to $9.4 million while profit fell 7.2 percent to $868,000 and it said sales so far this year were unchanged from a year earlier. E-commerce sales rose 24 percent to account for "almost 7 percent" of group turnover, suggesting revenue from its websites was about $15 million.

The company will pay a fully-imputed final dividend of 16.5 cents, unchanged from a year earlier, on Dec. 2.

It plans to provide a trading update at its annual meeting in December.

The shares last traded at $3.01 and have dropped 11 percent in the past 12 months.

BusinessDesk.co.nz

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