Hallensteins stores to close in Australia, Glassons to expand

Clothes retailer Hallenstein Glasson Holdings said today it was closing its four Hallensteins menswear stores in Australia and future growth there would concentrate on the Glassons womenswear chain.

The company has operated four small Hallensteins stores in Melbourne, and "has concluded that the Hallensteins formula, which is so successful in New Zealand, does not fit the Australian marketplace".

It's not the only New Zealand retailer to have discovered recently that a successful formula does not necessarily travel across the Tasman. The Warehouse has come to grief there, discovering Australians have different buying habbits to New Zealanders.

Conversely, Glassons had been successful in adapting its retail formula to suit the Australian market and the woman's chain will now concentrate on growing store numbers in New South Wales and Victoria.

During the next quarter Glassons will open two further stores, to bring the total in Australia 14.

Hallenstein Glasson said costs involved in exiting Hallensteins from Australia would not be material and were not expected to significantly affect the 2003 full year result.

Managing director Cliff Kinraid said the company saw no need to issue a profit warning due to that or any downturn in sales in New Zealand due to the slowing economy.

Benefits from closing the stores, which were not contributing to group profit would accrue in the 2004 financial year.

Mr Kinraid said the company had always been cautious about the menswear market because men spend less on clothes than women. It started operations in Australia five years ago.

"We decided to cut now because it was too hard and too risky and because we really needed to put more stores on and get some more critical mass."

The Glasson stores are profitable but Mr Kinraid said the cost structure above the stores was established to handle more stores than exist.

Mr Kinraid said any New Zealand company moving into Australia had to adapt. The Hallensteins stores had been performing adequately but there were too many risks.

Hallenstein shares, which yesterday were at a 12 month high, closed one cent easier today. They have traded down to $2.44 in the past 12 months.

- NZPA