Hallenstein confirms slump in profit as tough trading shrinks margins

Thursday 24th September 2009

Hallenstein Glasson Holdings Ltd., owner of the men’s and women’s clothing chains, confirmed a slump in its annual profit and said it was too difficult to provide guidance for the current year.

Net income fell 19% to $12.8 million, or 21.46 cents a share in the 12 months ended August 1, the retailer said in a statement today. Sales climbed 2.3% to $198.2 million. It first flagged its results last month.

“The battle for market share has resulted in margin erosion,” said chairman Warren Bell. The company is “tightly” managing inventories, he said. A better trading performance is expected in the current year and Hallenstein will provide an update at its annual meeting in December.

Hallenstein lifted earnings by 10% in the second half from the same period a year earlier, mainly reflecting an improved performance in Australia from its Glassons women’s clothing chain.

The shares last traded at $2.94 and have climbed 20% in the past three months.

Trading was hardest hit in New Zealand, which emerged from five quarters of economic contraction in the second three months of the year.

The Glasson and Hallenstein chains “faced a very competitive market in New Zealand, achieving sales as the expense of margin." The company’s Storm women’s wear chain bucked the trend, lifting same-store sales by 12%.

In Australia, where the economy managed to skirt recession, same-store sales rose 12.5% in Australian dollars, it said.

The company will pay a final dividend of 11 cents a share, imputed at a rate of 33%.

Businesswire.co.nz

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