By Jenny Ruth
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Monday 17th August 2009 |
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Hallenstein Glasson Holdings second-half sales were ahead of expectations and reversed the negative trend of the past six half-years, says Buffy Gill, an analyst at Goldman Sachs JB Were.
"We estimate second-half 2009 same-store sales growth of about 9% year-on-year, the first positive print since February 2006," Gill says.
This outperformance is likely to have been largely volume driven, given heavy discounting which continues to put pressure on gross profit margins, she says.
"We suspect the particularly cold and early start to winter will have helped to boost winter apparel sales." She notes that Glassons has had a strong promotional focus on winter merino knits, leggings and jackets.
She estimates Australian sales were about 9% ahead of the previous second half, reflecting the Australian government's massive economic stimulus packages ($A8.4 billion {NZ10.3 billion} in December/January and $A11 billion in March/April).
Gill is expecting positive earnings momentum from the New Zealand and Australian economic recoveries offset by a highly competitive apparel market, particularly in Australia.
"We would look to becoming more positive if we saw further scope for earnings upgrades." This could potentially company from the company demonstrating a greater than expected leverage to economic recovery or gross margin maintenance through any weakening of the currency.
BROKER CALL: Goldman Sachs JB Were rate Hallenstein Glasson Holdings (NZX: HLG ) as hold (up from sell).
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