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Hellaby Holdings' share price fell sharply yesterday on the back of Friday's profit warning - but not quite as much as managing director David Houldsworth had expected.
Shares closed down 47c yesterday at $4.07 following the company's warning that the poor performance of its retail and industrial division would cut net profit for the six months to December by as much as half from the previous year's $9.3 million. The investment company's shares are now down 12.8 per cent since Thursday.
"I thought it would probably drop down to $4 ... and it dropped down to the low fours but it seems to have picked up a bit since then this afternoon," Houldsworth said yesterday.
"I think the market's reaction is a reasonable reflection of what we said."
However, Forsyth Barr analyst John Cairns said the share price drop was bit of an over-reaction "bearing in mind that a number of the issues that they've confronted are of a short term nature and they've signalled that they're picking reasonable recovery in the second half back to their normal trading pattern".
Hellaby said net profit for the full year ending June might be down by about 20 per cent on the previous year.
Sales during November and December at Hellaby's Hannahs and Number 1 Shoe Warehouse had been disappointing, Houldsworth said.
"To what extent that's weather or what extent something else I don't know."
The second of three major shoe seasons would start in February with children heading back to school, to be followed in April, May and June with winter sales.
"We've certainly got the product mix and the marketing and promotions and everything in place for that," Houldsworth said.
"We can be confident but we can be wrong I guess."
The company was not concerned about the impact of general economic conditions on sales, he added.
"There's no extraneous factors that we see as being particularly negative of particularly positive."
December sales at the BBQ Factory were disappointing but still about 12 per cent up on last year, with a spectacular increase in turnover from the relocated and refurbished Christchurch store, Houldsworth said.
"We've got a lot more stores that we're going to be doing that to over the next couple of years so we feel much more confident that that's going to turn around and be good."
In the industrial businesses, industrial material handling equipment was down but construction equipment was strong, Houldsworth said.
Forsyth Barr retail analyst Guy Hallwright said the clothing and footwear sectors had been troubled for about three months, with bad weather leading people to either defer or minimise their seasonal spending.
"If you just get a bad couple of weeks ... at the start of summer and it turns nice that's fine, it just delays the sales. But if it goes on being unpleasant for long enough some of those things that people would have bought they just decide 'I'm not going to bother this year'."
