Hallenstein profit hit by the weather

Company forecasts better result in the current year

allenstein Glasson Holdings has posted a 21 per cent decline in fullyear profit, reflecting a loss from its Glassons unit in Australia and weaker earnings from its flagship menswear chain.

Profit fell to $ 13.7 million in the 12 months ended August 1, from $ 17.4m a year earlier, the Auckland- based retailer said. Sales rose 0.9 per cent to $ 223.5m.

Like most clothing retailers, Hallenstein buys in seasonal stock and relies on predictable weather to ensure customers buy its coats in the winter and beachwear in summer. But in the latest winter season, consumers in both Australia and New Zealand basked in what the company called “record mild temperatures”, reducing both sales and margins.

It also suffered from a lack of leadership at its Glassons womenswear chain before luring back former Pumpkin Patch chief executive Di Humphries to run the unit in April.

In the first six weeks of the current year, sales are up about 9 per cent, Glassons is recovering and “we anticipate a much- improved profit performance for the current trading period”, said chief executive Graeme Popplewell.

The biggest deterioration in the latest year was from Glassons Australia, which recorded a loss of $ 1.9m, which it blamed on a mild winter and margin pressure, from a profit of $ 170,000 a year earlier. Sales were little changed at $ 41.2m, while cost of sales rose 8.2 per cent to $ 17.3m.

The retailer closed t wo outlets during the year and said “further store rationalisation is under review where costs and performance fail to meet our criteria”.

At the same time, three stores were refurbished to a new design and more will be changed to the new format, while two new stores will be opened before Christmas, it said. So far in the current year, same- store sales were up 13 per cent.

Its Hallensteins chain in New Zealand recorded a 4.5 per cent gain in sales to $ 89m but its gross margin contracted to 57.2 per cent from 60.9 per cent, which it attributed to the mild winter and a weaker exchange rate, resulting in an 11 per cent decline in profit to $ 8.5m. Sales didn’t grow in the first six weeks of the current year, it said.

Its Storm chain lifted sales by 4.4 per cent to $ 9.4m, while profit fell 7.2 per cent to $ 868,000 and it said sales so far this year were unchanged from a year earlier. E- commerce sales rose 24 per cent to account for “almost 7 per cent” of group turnover, suggesting revenue from its websites was about $ 15m.

The company will pay a fullyimputed final dividend of 16.5c, unchanged from a year earlier, on December 2.

It plans to provide a trading update at its annual meeting in December.

The company’s shares closed up 13c yesterday at $ 3.14.