By Jenny Ruth
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Thursday 9th June 2011 |
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Hallenstein Glasson Holdings' sales and profit warning at the end of May has led her to cut her earnings estimates, says Buffy Gill, an analyst at Goldman Sachs & Partners.
Hallenstein said New Zealand's exceptionally mild winter and having seven of its Christchurch stores still closed was behind a 2.4% fall in group sales in the 17 weeks ended May 29 compared with the same period a year earlier. It also talked about aggressive discounting and said the last two months of its financial year will be difficult.
Gill has cut her expected adjusted net profit forecast for the year ending July from $18.5 million to $17.1 million, down from the $20.4 million Hallenstein earned in 2012.
She has also cut her 2012 forecast from $20.2 million to $19 million and her valuation of the shares from $3.95 to $3.80.
"We see a number of both short and medium term headwinds continuing to afflict the retail sector which even solid operators such as Hallenstein will not be fully immune from," Gill says.
These include low relative levels of household wealth driven by depressed house prices and only modest wages growth.
Low levels of consumer confidence combined with a structural shift in consumer behaviour towards net saving are also hurting retailers.
Recommendation: Hold.
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