Hallenstein Glasson Holdings said annual profit fell 22 percent to its lowest level in seven years due to weaker margins at its clothing chains.

Net profit fell to about $13.5 million in the 12 months ended August 1, from $17.4 million a year earlier, the Auckland-based company said in a statement. That's the lowest profit since 2009 when the company earned $12.8 million. Sales edged up to $223.5 million from $221.5 million, it said.

The clothing retailer, which operates the Hallenstein menswear brand and the Glassons and Storm womenswear brands, said its gross margin fell to 56.5 percent from 59.3 percent a year earlier.

That reflected a lower exchange rate that increased the cost of offshore purchases, mild winter temperatures that prompted discounting of winter categories, and a lack of effective management at its Glassons business.


However the company said purchases for the key December trading period will be made at a more attractive exchange rate, and the performance of the Glassons business has improved since June after Di Humphries returned as head of the unit in April.

"The group's cash reserves remain healthy and future cash flow is projected to be positive," chief executive Graeme Popplewell said. "Given current trading trends, the expectation is that December dividend will remain at historic levels."

In the 2015 financial year, the company paid a final dividend of 16.5 cents per share, taking its full-year dividend to 31 cents, up from 28.5 cents in 2014.

The company will publish is full profit details on Sept. 23.
Hallenstein shares last traded at $2.70 and have shed 19 percent this year.