Hallenstein boosts dividend 8.8%, as FY profit jumps; margin squeeze seen

Wednesday 30th September 2015

Hallenstein Glasson lifted is full-year dividend by 8.8 percent while reporting a 22 percent jump in profit but warned intense retail competition was eroding margins.

Profit rose to $17.4 million in the 12 months ended Aug. 1, from $14.3 million a year earlier, the Auckland based retailer said in a statement. Sales increased 6.5 percent to $221.5 million. The board declared a final dividend of 16.5 cents per share, taking its full year dividend to 31 cents, up from 28.5 cents a year earlier.

Hallenstein is among retailers that struggled through 2014 in the face of intense competition from online rivals, thrifty consumers and unfavourable weather conditions. Retailers have responded by cutting prices, eroding their margins, to lure back shoppers to their bricks and mortar stores.

The company said sales for the first 8 weeks of the current year are up 4 percent on the prior year, but intense competition meant sales were coming at the cost of margin compared to the year-earlier period. Meanwhile, the weaker Australia and New Zealand dollars were also pressuring margins and "the ability to raise price to compensate is limited". It expected to update shareholders at their annual meeting in December.

The retailer has focused on clawing back its market share in a competitive environment, and said menswear chain Hallensteins has firmly cemented its position in the young male fashion market. It reported a 19 percent increase in profit to $9.6 million, while sales increased 6.8 percent to $85.6 million.

Glassons New Zealand, the company's female fashion brand, reported a 17 percent drop in profit to $6 million, while sales rose 2.5 percent to $85.7 million. The chain had leadership changes during the year, which caused disruption to the "momentum Glassons was experiencing in the earlier part of the year". New management was working toward recovering lost ground. Storm, its more upmarket womenswear chain, listed profit 28 percent to $935,000 and increased sales 4.4 percent to $9 million.

Glassons Australia turned to a profit of $170,000, from a year-earlier loss of $1.5 million, while sales rose 19 percent to $41.2 million.

E-commerce sales, while the company said makes up 5.4 percent of total group sales, increased 8.7 percent in the year. Hallenstein is investing in the channel to earn more of its revenue from online.

Hallenstein shares last traded at $3.51, having fallen from a high of $5.85 in April 2013.

BusinessDesk.co.nz

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