Hallenstein Glasson cost cutting boosts profits

Profits at Hallenstein Glasson are up after back office cost cutting offset lower margins on sales stock. Photo/Jason Oxenham.

Hallenstein Glasson Holdings lifted first-half profit 5.9 per cent as cuts to back-office costs offset skinnier margins from clearance sales.

Net profit rose to $16 million in the six months ended February 1, from $15.1m a year earlier.

Lower administration costs of $12.4m, down from $14.3m, helped offset a bigger tax bill of $6.5m.

Revenue grew 3.1 per cent to $151.2m but gross margin shrank to 59.7 per cent from 61.5 per cent, leaving gross profit flat at $90.2m.

The contraction in margin was due to increased promotional sales through November and December.

"Although the trading environment in both New Zealand and Australia is still challenging, it has been encouraging that group sales for the first seven weeks of the 2019 winter season are 1.5 per cent ahead of the same period last year," chair Warren Bell said in a statement.

The result was in line with guidance given in February.

The board declared an interim dividend of 20 cents per share, to be paid on April 18, unchanged from a year earlier.

Bell said the retailer's balance sheet was strong and inventory well controlled. That, combined with the current trading, meant the board could maintain the dividend.

The shares rose 2.2 per cent to $4.65 and are up 10 per cent so far this year.

The retailer's inventory stock was $23.9m at February 1, up from $18.7m a year earlier.

Mary Devine will officially take over the reins as managing director from April, replacing chief executive Mark Goddard, who unexpectedly resigned in February.

Bell said the group will keep focusing on building digital engagement with customers, controlling costs and expanding market share under Devine's leadership.

Sales in the womenswear Glasson brand climbed 16 per cent in Australia to $48.5m and were up 1.6 per cent at $51.1m in New Zealand.

"As with last season, the focus will be on fashion, speed to market and customer service to keep the brand in a strong position in both New Zealand and Australia," Bell said.

Sales were up 1.3 per cent at $51.7m across its Hallenstein stores on both sides of the Tasman.