Hallenstein reports $15m 1H profit on strong Christmas sales, lifts dividend

Thursday 29th March 2018

Hallenstein Glasson Holdings has lifted its first-half dividend and says its two core brands, Glassons and Hallenstein Brothers, are in a strong position going into winter trading.

Last month, the company told the market that total group sales for the six months ended Feb. 1 were $146.8 million, an increase of 19.4 percent over the prior corresponding period, and group profit after tax was in a range of $14.75 million to $15.25 million versus $9.2 million in the prior year.

Net profit in the first half was $15.1 million, and the gross margin was up 3.4 percentage points to 61.5 percent. It declared a 20 cent first-half dividend, up from 14.5 cents in the 2017 first half. The company said sales in the first seven weeks of the winter season have been up 18.2 percent on the previous year, which is "encouraging" and online sales growth is continuing. The shares rose 2.4 percent to $5.10, up 2.4 percent today and 52 percent in the past 12 months.

"It's a very strong trading result and a strong dividend," said Greg Easton, investment adviser at Craigs Investment Partners. "It has been quite a stunning turnaround from six months ago, they have bucked the trend for a bricks-and-mortar retailer."

The clothes retailer said its Glassons segment performed very strongly over Christmas in both New Zealand and Australia, with NZ sales in the six months up 9.8 percent to $50.3 million and Australian sales jumping 60.5 percent to $41.8 million.

"The team’s focus on fashion, speed to market, customer service and digital engagement continues to deliver strong sales as well as a reduced dependency on discounting and promotions in both markets," the company said. "This, together with the strong focus placed on Australia by the management team and along with the two new store openings, including Melbourne CBD, has delivered the strong growth."

For Hallenstein Brothers, sales in both countries rose 8.8 percent to $51 million.

Online shopping is now responsible for 11 percent of group turnover, and the company said its move away from traditional marketing "to digital, social and influencer events" is helping to build engagement. "The group will continue to invest and build this area as we continue to further differentiate ourselves from the competition," it said.

Earlier this month, the company announced it had agreed to sell the Storm clothing chain to Deborah Caldwell, who has been the brand's chief executive since 2005. The chain delivered a $1.5 million net loss in the first half, from a $31,000 profit in the same period the previous year. Hallenstein Glassons hasn't disclosed the price paid for Storm and the latest accounts note the deal is expected to be completed by April 30.

"Following the sale of Storm, the Group’s focus is on building and growing Glassons and Hallenstein Brothers in both the New Zealand and Australian markets, with each of the brands in a strong position going into the key winter trading months," it said today.

(BusinessDesk)

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