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Hallenstein annual profit falls 11 percent as Glasson margins come under pressure

Thursday 26th September 2013

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Hallenstein Glasson Holdings, the clothing chain, reported an 11 percent fall in annual profit, near the bottom of guidance, as margins at its women's wear Glasson unit came under pressure.

Net profit fell to $18.7 million, or 31.3 cents per share, in the 12 months ended Aug. 1 from $21 million, or 35.24 cents, a year earlier, the Auckland-based retailer said in a statement. That was near the bottom of its guidance in June when it said profit would be between $18.5 million and $19.5 million. Sales edged up 2.1 percent to $220.1 million.

"Both the Hallensteins and Storm brands performed to expectations, but Glassons in both New Zealand and Australia felt the full brunt of a record mild winter and aggressive discounting in the women's wear marketplace during the past six months," the company said in a statement.

Hallenstein has been among a group of clothing retailers who gave profit warnings as tough competition in Australia put a squeeze on margins and as the warm winter kept consumer spending on apparel under wraps. Children's clothing retailer Pumpkin Patch, another who gave a profit warning, is due to report its earnings today.

The company's margin on operating profit narrowed to 11 percent from 13 percent a year earlier.

The company said the first seven weeks of the 2014 financial year have been "difficult" with sales down 9 percent from a year earlier, most of which is in the women's wear segments.

The board declared a final dividend of 17.5 cents per share, payable on Dec. 6 to shareholders on the register at the end of Nov. 29. That takes the total payout to 33.5 cents per share, unchanged from a year earlier and more than the retailer's annual profit this year.

"Future dividend will be dependent on group trading performance and capital expenditure requirements," Hallenstein said. The company has previously said it has a dividend policy of paying between 90 percent and 95 percent of after-tax profit.

The shares were unchanged at $5.04 yesterday, and have declined 3.8 percent this year.

Sales at the retailer's Hallenstein range rose 5.3 percent to $81.6 million, and boosted profit 18 percent to $9.1 million, while its Storm unit lifted revenue 24 percent to $9.3 million and profit 17 percent to $1.6 million.

Glassons New Zealand, the biggest segment by sales, reported a 3.1 percent fall in revenue to $88.2 million and a 22 percent slide in profit to $8.4 million, and Glassons Australia sales increased 3.7 percent to $40.9 million, while turning a loss of $1.2 million.

BusinessDesk.co.nz

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