Clothing retailer Hallenstein Glasson Holdings has reported a 40.7 per cent fall in half year net profit to $5.48 million.
The company today said the retail environment had been exceptionally difficult, and the quest for the consumer dollar had been at the expense of margin.
"We have found it necessary
to aggressively promote in order to maintain market share and ensure inventory levels are managed effectively," the company said.
For the six months to February 1 sales revenue fell 2.8 per cent from a year earlier to $95.71m, while cost of sales rose about $1.5m to $44.9m. That left gross profits down 7.8 per cent to $50.81m.
Gross profit on sales during the half year was 53.3 per cent, down 2.7 points from 56 per cent for the previous period, Hallenstein Glasson said.
Despite the "disappointing" result, the group balance sheet remained strong. Inventory levels at $12.18m were below the prior period level of $16.68m, demonstrating the group's ability to manage inventory.
An interim dividend of 10c per share will be paid, compared to 17cps last year.
The company said the retail environment was extremely difficult to predict.
Rising unemployment and concerns about job security were clearly having a dampening effect on demand, yet falling interest rates, reduced taxes, and lower petrol prices were having a counterbalancing effect.
Same store sales for the first seven weeks of the winter season were up 7 per cent on last year, but sales had been achieved on a lower gross margin than last year so overall profitability was marginally below last year.
"These results indicate some resilience, but the key winter trading months have yet to come and it is much too early to make any pronouncement on earnings for the current period," Hallenstein Glasson said.
During the six months period three new stores were added.
In Australia Glassons opened a store last August at Doncaster in Melbourne, while in this country a further Glassons store was opened in late November in Blenheim. The Storm chain opened its fourth store at Milford, Auckland in October.
Hallenstein Glasson shares closed at $2.30 yesterday, having ranged between $4.11 and $1.94 in the past year.
- NZPA
