Hallenstein Glasson upgrades profit after 19.4% sales increase

CLOTHING retailer Hallenstein Glasson issued a significant profit upgrade yesterday, after a 19.4% increase in sales for the six months ended February 1.

Sales in the period were $145 .8 million, well ahead of the $122.9 million reported in the previous corresponding period.

Chief executive Mark Goddard said group profit after tax was projected to be in the range of $14.75 million to $15.25 million, an increase of about 63% over the $9.2 million last year.

The full market announcement and dividend declaration would be released on March 30.

Gross margin for the six months was about 3.5 percent age points up on the previous year and was achieved through strong sales performance, improved buying strategy and reduced promotional activity and discounting, Mr Goddard said.

Forsyth Barr broker Lyn Howe said the company’s 10year history showed significant earnings volatility.

Earnings per share (EPS) growth over the past 10 years included four periods of doubledigit decline and six of doubledigit growth.

The 2018 financial year was on track to be a record year for the company and internal execution was ‘‘particularly impressive’’ through the key Christmas period.

‘‘We do continue to question the sustainability of consistent profit growth in the longerterm in the challenging fashion apparel sector.

‘‘However, current momentum in the business is particularly strong.’’

Hallenstein Glasson’s three chains were largely mature in New Zealand, she said.

Trading conditions were tough for apparel retailers and the structural shift to online presented earnings risks.

Forsyth Barr was taking a cautious view on the longterm outlook. The company had strong brands and recent strategic changes were delivering positive results. Recent trading had been very strong.

The company also offered an attractive yield, supported by its net cash position, Ms Howe said.