Tough trading in transtasman womenswear takes toll on clothing retailer's full-year profit

Challenging winter trading took a heavy toll on Hallenstein Glasson's full-year profit, but an analyst says the outlook may soon improve.

The Auckland-based clothing retailer said net profit in the 12 months to August 1 fell to $18.7 million from $21 million in the previous year, while total sales rose 2.1 per cent to $220.1 million.

Its Hallenstein and Storm brands performed to expectations but Glassons stores had "felt the full brunt" of the mild winter and aggressive, margin-sapping discounting in the transtasman womenswear market over the past six months, the firm said.

Shares closed down 11c at $4.93 last night.


The company said full-year sales for its Hallensteins menswear stores, which operate only in New Zealand, rose 5.3 per cent, while net profit lifted by 17.7 per cent. Sales at its Storm women's fashion stores increased 24 per cent and net profit lifted 17.2 per cent.

Glassons sales in New Zealand fell 3.1 per cent on the previous year, while profit plunged by 21 per cent, the company said.

Full-year sales at Glassons Australia increased by 6.4 per cent, but reduced margins from heavy discounting resulted in an after-tax loss of $1.2 million, including a $500,000 loss incurred for store relocation and restructuring.

Craigs Investment Partners head of private wealth research Mark Lister said a more certain political outlook in Australia, as well as lower interest rates in that country, should result in increased consumer spending and less pressure on retailers to discount heavily to drive sales.

"I think Australia will get its act together a bit, economically," Lister said.

He said the drop in full-year profit came as no surprise to the market - in a June trading update the company said annual net profit would be in the range of $18.5 million to $19.5 million - which explained the only small fall in the firm's share price yesterday.

Hallenstein Glasson said the first seven weeks of its new financial year had been challenging, with group sales 9 per cent down on the prior year. Most of the decline had been in womenswear, the retailer said.

The company also announced it had entered a partnership with Ekocycle - a collaboration between Black Eyed Peas singer and the Coco-Cola Company - to introduce a collection of men's suits made from sustainable material under the Hallenstein Brothers tailored suit label.

A final dividend of 17.5c per share was declared, taking the full-year dividend to 33.5c per share.