Hallenstein annual profit tumbles 23% on discounts

Wednesday 5th August 2009

Hallenstein Glasson Holdings, owner of the men’s and women’s clothing chains, said annual profit tumbled about 23% as it trimmed prices to lift sales, eroding its margins.

Net profit was $$12.2 million to $12.4 million in the 12 months ended August 1, the retailer said in a statement today. Sales rose 2.3% to $198.2 million for the 12 months, having climbed 7.6% in the second-half of the financial year.

“Sales for the winter season had shown a gradual return of consumer confidence in both Australia and New Zealand,” said chief executive Roy Dillon. Still, “sales had been achieved through aggressive pricing strategy which had been at the expense of margin.”

Sales growth was helped by an early start to cooler winter weather, which stoke demand for seasonal items. In Australia, revenue was helped by the government’s fiscal stimulus measures, Hallenstein said.

Reserve Bank of Australia Governor Glenn Stevens this week kept the benchmark interest rate across the Tasman at 3% and said the risk of a severe contraction in the economy had abated. Consumer spending showed “resilience,” he said.

In New Zealand, government figures showed retail spending on debit and credit cards fell 1% in June, the steepest decline since November.

“Overall our inventories remain within budget, and we will continue to seek to improve market share in what we see as a subdued retail environment over the coming months,” Dillon said. The drop in profit is mildly better than forecast by Forsyth Barr analyst Guy Hallwright, who was predicting a 24% decline to $12 million for the full year.

Shares of the retailer were unchanged at $2.85 and have gained 9.8% in the past month. The shares are rated ‘underperform,’ based on the average of four analysts’ recommendations compiled by Reuters.

The company plans to release its full results on September 24.

Businesswire.co.nz

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