Hallenstein Glasson annual profit jumps 58%; shares gain

Friday 28th September 2018

Hallenstein Glasson Holdings confirmed annual profit rose 58 percent as expected, and said sales at Glassons and Hallenstein Brothers clothing chains lifted 7.2 percent in the first eight weeks of this financial year as the retailer focuses on improving its buying, speed-to-market, customer service and expanding its network.

Under the stewardship of new chief executive Mark Goddard, who took over in April last year, the retailer on April 30 this year sold its unprofitable Storm retail chain and is focusing its efforts on expanding its two major brands across New Zealand, Australia, and online.

It confirmed that profit in the year to Aug. 1 was $27.4 million, in line with its forecast last month for profit of $27.1 million to $27.6 million. Annual sales rose 16 percent to $277.6 million.

"The buying strategy, investment in digital and the improvements in customer service and experience that were implemented in 2017 have supported sales and margin growth," the company said. "Combined with tighter cost control, this has in turn led to significant net profit growth. Whilst the trading environments remain tough in both New Zealand and Australia, our brands have responded and adapted to these conditions to deliver the strong result."

It will pay a 24 cent final dividend on Dec. 17, taking the annual dividend to 44 cents, ahead of 31.5 cents the previous year.

The company's shares rose 5.5 percent to $5.93, having gained 42 percent so far this year.

In its largest business, the Glassons womenswear brand, annual profit in New Zealand rose 31 percent to $10.6 million as sales lifted 8.1 percent to $96.7 million. It renovated its Queenstown and Queensgate stores to a new concept design and closed an underperforming store in Henderson. So far this financial year it has refurbished its Dunedin store and has other refurbishments planned, it said.

Meanwhile, profit at Glassons Australia jumped to $8 million from $1.4 million as sales surged 57 percent to $78.4 million. It opened new stores in Melbourne Central and Charlestown, while Warringah and Chermside were refurbished in line with its new concept. It recently refurbished stores in Bondi, Highpoint and Parramatta and said it has more refurbishments planned, along with store openings in The Glen and Liverpool and others under consideration.

Its menswear brand Hallenstein Brothers increased profit 19 percent to $8.9 million as sales lifted 6.4 percent to $96.9 million. It refurbished its Queenstown store in line with a new concept and closed two small underperforming stores.

Its three Hallenstein stores in Australia have performed "steadily" and the company said it remains positive about the opportunity that exists for the brand in that market.

Further investment in stores is planned for the current financial year as well as an extension to the distribution centre to accommodate the growth in online sales, it said.

The divested Storm chain reported a loss of $732,000 compared with a loss of $313,000 in the 2017 financial year. It didn't disclose the sale price, which it said wasn't significant.

"The group's focus is on expanding its other two much larger fashion brands, namely Glassons and Hallenstein Brothers in both New Zealand and Australian markets," the company said. "The group continues to improve and build on its buying strategies, speed-to-market, and customer services."

Online sales grew 64 percent and now represent 13 percent of group turnover, the company said.

"We will continue to invest in technology and resources to build momentum in this strategic area of the business into the future," it said.

"Strategic investment continues in digital, as well as in new and refurbished stores. Customers have reacted positively to new season stock and web sales continue to grow."

The company said it's focused on delivering a "strong performance" going into Christmas trading, and it will provide an update at its annual meeting of shareholders in December.

(BusinessDesk)

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