Hallenstein Glasson lifts; winter trading starts well

CLOTHING retailer Hallenstein Glasson has reported a higher interim profit for the six months ended February 1 and says its first few weeks of winter season trading has been encouraging.

The retailer reported an operating profit of $71 million for the six months, up from the $63.8 million reported in the previous corresponding period (pcp).

Revenue was up from $112.3 million in the pcp to $122.9 million. Expenses grew to $59 million in the latest period from $55 million to give earnings before tax of $12.8 million, up from $9.5 million.

The reported profit was up nearly 35% to $9.2 million from $6.8 million.

Chairman Warren Bell said in a statement to the NZX gross margin on sales was 58.1% compared to 56.8% in the pcp.

‘‘This has been achieved due to an improved exchange rate and better product cost prices achieved through negotiation.’’

Expenses continued to be well controlled and were in line with expectation.

While Glassons had strong sales growth in both Australia and New Zealand, Hallenstein Brothers and Storm had small falls in sales.

There was continued management focus on both brands and results for the start of the winter season had already seen an improvement, he said.

Ecommerce growth for the group continued, up 35% on the pcp.

Glassons Australia continued further expansion with the opening of a further two stores, refurbishing three stores and closing two nonprofitable stores in the season.

That helped drive an increase in sales of 23.3% on the pcp and meant the Australian chain returned to profit, Mr Bell said.

Hallenstein Brothers opened two stores in Queens land during the season and early results were in line with expectations.

Total group sales for the first seven weeks of the 2017 winter season had been encouraging, increasing on last year by 5%. Gross margin continued to show a small improvement on last year.

Growth in sales from ecommerce continued to outperform bricks and mortar and sales for the first seven weeks of the season were up 36%.

Each chain was in a strong position going into the key winter trading months, Mr Bell said.

Forsyth Barr broker Damian Foster said the company’s new chief executive, Mark Goddard, would start in midApril.

‘‘We are awaiting insight into his strategic plans for the company.’’

Hallenstein Glasson offered an attractive yield and traded at undemanding multiples on current earnings. However, earnings were highly volatile. 2017 was on track to be a strong year, although Mr Foster remained cautious on the longterm outlook.

The shares last traded at $3.55, up 5%.