Hellaby Holdings, an investment company with a 40 per cent share of the local shoe retail market, said its first-quarter trading was down both on expectations and last year.
The owner of No 1 Shoes and Hannahs said it experienced a similar slow start to the year lastyear but trading improved.
However, it was feeling the effects of a downturn in the agriculture sector in its agricultural tyre business, TRS Tyre and Wheel.
"I believe the downturn in the agricultural sector, particularly if the New Zealand dollar remains at present levels, will have an increasingly negative impact on the economy, which is unlikely to be offset be activity in any other sector," chairman Bill Falconer told shareholders at the annual meeting.
"Overall, retailing appears likely to remain flat with improvement sluggish, and non-primary exporting sectors are also experiencing the effect of the strengthened dollar."
However, the company had not changed its expectations for its trading performance for the year.
"We will review this again when we report our half-year results early next year, which will include our retail activities over their busiest trading period."
The company's average return on shareholders funds employed in 2006 was 21 per cent.
During the year the company raised $50 million through the sale of capital notes, which was used to repay existing debt.
The company also sold stakes in Rodd & Gunn, Oakleys Plumbing Supplies, Teamwork Inteletrac and New Zealand Wool Services as part of a rationalisation of its investment portfolio.
This week Hellaby announced the purchase of HCB Technologies, an importer and distributor of industrial batteries.
Chief executive David Houldsworth said the group's tax expense increased significantly because the various tax losses and tax benefits were no longer available and the adoption of international accounting standards also affected reported earnings.
The company had a dominant position in the New Zealand shoe market and a sound beach head in the Australian shoe market to provide future growth opportunities.
