They've got the look at House of G

Glassons store manager April Pokaia adjusts clothes on show. Picture / Kenny Rodger

You know you've made it if you can get them to swing your bag rather than put it inside someone else's," says Hallenstein Glasson managing director Cliff Kinraid, with a hint of pride.

As much as an acknowledgement of success, it's a telling admission that shopping at the ubiquitous high street fashion stores was once a source of shame to those with a serious eye for fashion.

Not any more - hordes of 18-year-old devotees of the "House of G" are now letting those Glassons bags swing in public. Even the shopping-adverse teenage male is treating Hallensteins as a one-stop shop - one that won't make him "look like a dick".

And the proof is in the profits.

Since Kinraid took over as managing director in 2002, the Hallenstein Glasson share price has doubled and profits have gone close to doing the same.

The company has seen off Australian challengers on its home patch and appears to have even cracked the Australian market - at least with the Glassons brand.

Perhaps, most importantly, the once frumpy old school clothing chains have managed to get down and boogie with the kids.

The 'House of G' has become part of lexicon for many in the target 18 to 30-year-old market who drop by at least once a week.

But when the two companies merged in 1986, Hallensteins was an old-style menswear store with a history dating back to 1894.

"The great legacy was, if you ask any older person, they sold school uniforms. And the old fella still walks in looking for walk shorts and the like," says Kinraid.

When ad agency Publicis Mojo took on the South Island Glassons chain in 1994, it was the mumsy "Guernsey jumpers and leggings brand", says account director Anna Murray.

"Our role was to make it fashionable, modern, youthful and current and that has been well and truly achieved."

But it took a while for the company's performance to catch up.

As Forsyth Barr retail analyst Guy Hallwright puts it: For the decade before 2004 not much happened.

"Profits bounced around a bit but were effectively flat and the share price was effectively flat, but there was exceptional improvement in 2004 and 2005 and it appears we are getting another one in 2006."

Net profit was stuck at about $11 million from 2000 to 2003 but leapt to $16 million in 2004. It was $19.3 million last year and looks set to top $20 million this year.

Hallwright notes retail margins generally have expanded a lot in the past few years driven by the strong dollar.

"So some part of it - we don't know how much - relates to the dollar but part of it relates to good product choice, basically getting the ranges right."

With the launch of a new chain, Storm, last month, the company will target a gap it sees in the mainstream women's apparel market - between the volume fashion retailers and high-end designer boutiques.

Kinraid expects more Australian retailers are on the way but regards the competition as positive. "It keeps us on our toes."

It also meant a better acceptance of Kiwi fashion across the Tasman - whereas 10 years ago the two markets were like "chalk and cheese".

"Now just about anything we can sell here, we can sell in Australia. That's happened through the internet and I think those cheap airfares."

It also means the stores have to be far more responsive to new trends.

"Teenagers' take on the market is far quicker now. They know what is happening in Top Shop in London, so we have to be in those markets far more, picking up their newness or they [shoppers] just move on."

Kinraid credits the polo shirt for much of Hallensteins' success last Christmas.

"Every guy in the world wanted a polo, we were lucky we had something going and that was good hindsight from our buying guys, they saw the trend and had a crack at it."

This winter, he hopes knitwear will be the big seller.

"But I think in the end you've got to get it right every time and that's why we travel a lot."

Kinraid has a small team of talented young buyers - some still in their early twenties - who have made an art form of picking which trends out of Los Angeles, New York and London are going to translate to Kiwi buyers.

He values them so highly he was reluctant to see them profiled in this article - for fear of poaching by rivals.

While the period before 2004 wasn't a time of strong growth for Hallenstein Glasson, it was a crucial transition period for the stores. Kinraid said its success then was in seeing off the challenge from Australian retailers.

The arrival of Sportsgirl and Katies in the early 1990s prompted a repositioning of Glassons as a fashion brand in preparation for what they thought would be an onslaught from across the Ditch.

"We thought, if Sportsgirl's successful, then others will come. Fortunately, they weren't successful, maybe because of what we went out to do."

And in an era where several high profile menswear rivals went under, similar steps were taken with the Hallensteins stores, resulting in a tighter product mix, new store fit-outs and closures in smaller towns and the launch of the "It's good to be a guy" campaign, which now features Exponents singer Jordan Luck.

However, it was harder to make the label work in Australia and, in 2003, the company gave up on its four Hallensteins stores, introduced across the Tasman in 1997.

"We were getting reasonable turnover from some of the stores but it was pretty hard to break into and, yeah, Aussie blokes are a bit more traditional in where they want to shop."

A year later, Hallenstein also sold out of its 14-store New Zealand HBKGirl chain, with Kinraid saying the "tween" label for eight to 14-year-olds "just didn't fit" with the rest of the business.

Despite a fiercely competitive market for young female fashion across the Tasman, the company has succeeded in exporting its Glassons formula to Australia, where it opened a 21st store this week.

Sales across the Tasman rose 30 per cent to $13.3 million for the six months to February. They now make up 13 per cent of the total against 11 per cent a year ago.

Kinraid said more significantly, Australian operations generated a net profit of $553,000, against last year's $114,000 and the Australian business had reported four consecutive six-month periods of profits. The 77 New Zealand stores remain the backbone of the company, where half-year sales were up 8.1 per cent at $86.9 million and operating profit up 24 per cent to $10.3 million.

The company won't disclose the revenue split between the brands, except to say takings from Glassons New Zealand and Australia are higher than Hallensteins.

Despite a conservative approach to Glassons expansion in Australia and caution over store locations, Kinraid sees anything from 70 to 100 Glassons stores across the Tasman in future.

"So that's the difference compared with New Zealand Glassons where we've got 30 and that's it."

Analysts seem to believe the growth story in Australia now.

Hallwright said the jury had been out for a while, "but it seems to be growing reasonably well. It's not making huge contributions. It's a competitive market, but they have established a position in the market where they have a shop that people want to go into." 


Nickname says you've made it

A Glassons girl is "the girl who doesn't want something straight off the catwalk - quite fashion-conscious and fashion savvy", says Hallenstein Glasson managing director Cliff Kinraid. "She's looking for the latest trends, probably waiting for them just when they're becoming acceptable rather than the extreme."

Of the blokes who shop at Hallensteins: "They just want to make sure they don't look like a dick."

Selling menswear, however, was much harder with the average Kiwi bloke shopping only two or three times a year.

"They come in 'on patrol' and want to do it once, do it well and not get ripped off. Then they bugger off for the next six months," says the director of the Hallenstein Glasson account at Publicis Mojo, Anna Murray.

In fact, while Glassons just targets females, Hallensteins has to appeal to males and females because it's the girlfriends who influence men's buying. Kinraid estimates women have a hand in at least half of all male shopping purchases.

Murray said Hallensteins' "It's good to be a guy" campaign set out to build an emotional connection with the brand beyond product and price.

The 'House of G' nickname - which Murray considers a "term of endearment" from shoppers - happened naturally at Glassons.

"And when it gets to that point, you've made it."