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Hallenstein 1H profit rises 35%, early winter sales 'encouraging'

Thursday 30th March 2017

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Hallenstein Glasson Holdings posted a 35 percent increase in first-half profit, meeting its forecast, and said early winter sales were "encouraging".

Profit rose to $9.2 million, or 15.4 cents per share, in the six months ended Feb. 1, from $6.8 million, or 11.43 cents, a year earlier, the Auckland-based retailer said in a statement. That matched its forecast for profit of $9 million and $9.2 million. Sales gained 9.4 percent to $122.9 million, while selling, distribution and administration expenses rose 7.6 percent to $59 million.

The retailer said its profitability improved, with the gross margin on sales lifting to 58.1 percent from 56.8 percent in the year-earlier period, reflecting an improved exchange rate and after it negotiated better product cost prices. The company's fortunes are starting to lift after profit fell by a fifth last year as a decline in the kiwi dollar made imports more expensive, squeezing its margins, while its women's clothing chain Glassons struggled. Under the leadership of Di Humphries, Glassons first-half sales and profits improved in Australia and New Zealand, although the group's menswear chain Hallenstein Brothers and fashion brand Storm were weaker.

"There is continued management focus on both brands and results for the start of the winter season have already seen improvement," said chair Warren Bell. "Each chain is in a strong position going into the key winter trading months."

The company said group sales for the first seven weeks of the 2017 winter season had been "encouraging", up 5 percent on the year-earlier period, and the gross margin continued to show a small improvement over last year.

First-half profit at Glassons New Zealand jumped to $4.1 million from $1.4 million in the year-earlier period, as sales increased 18 percent to $45.8 million. In Australia, Glassons turned to a profit of $1.2 million from a loss of $785,000, and sales rose 23 percent to $26 million, as it opened two new stores, refurbished three stores and closed two non-profitable stores.

At the Hallenstein Brothers chain, profit fell 34 percent to $3.6 million as sales slipped 2.1 percent to $46.9 million. Meanwhile, profit slumped 93 percent to $31,000 at its minnow Storm chain as sales declined 8.6 percent to $4.2 million.

In the first half, e-commerce sales for the group increased 35 percent from the year-earlier period and were ahead 36 percent in the first seven weeks of the current winter season. It didn't give a dollar value for e-commerce sales.

The company will pay a first-half dividend of 14.5 cents per share on April 13, up from the 13.5 cent payment last year.

Its shares rose 3.3 percent to $3.49 and have gained 20 percent over the past year.

The group confirmed its new chief executive Mark Goddard will start mid-April, replacing Graeme Popplewell.

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