Covid takes a big bite out of Glassons’ NZ profit
Hallenstein Glasson Holdings has revealed that profit plummeted by 64 per cent in its New Zealand Glassons stores due to pandemic struggles during the 12 months ended August 1.
Hallenstein Glasson chief executive Stuart Duncan told the NZ stock exchange (NZX) that the retailer had to battle a difficult trading environment over the past year, with Omicron surges affecting staffing and changes to customer shopping habits, particularly in New Zealand.
In the 12 months ended August 1, Glassons’ New Zealand net profit came to just $4.1 million, a huge drop of 64.7 per cent on the prior corresponding period, which was $11.6m.
New Zealand sales were better but still down 13 per cent to $104.4m. In Australia, net profit went in a more positive direction, climbing 16.4 per cent to $19.1m, with sales for the Australia region also rising by 17.4 per cent to $156.9m.
Hallenstein opened its first South Australian Glassons store, in Adelaide, in September 2021. In addition, new stores opened in the western Sydney suburb of Penrith, and Canberra in the first half of this year. One store in Sydney was closed in March, the company said.
Hallenstein Glasson’s total net profit fell 23.2 per cent to $25.6m in the 12 months ended August 1, down from $33.3m a year earlier. But group sales barely moved from the previous corresponding period, coming in at $351.2m, which was up just 0.1 per cent from $350.8m in 2021.
Duncan said that achieving sales on par with the previous year was “pleasing” given the “numerous challenges”.
Sales were hit by the numerous lockdowns in both NZ and Australia in the first six months of the year ended February 1, as stores were forced to close.
However, sales in the second half of the 2022 financial year were up 6.6 per cent from the same period last year as all stores remained open.
The company told the NZX that gross margins had “held steady” during the year at 57.6 per cent, compared with 57.4 per cent the year
before. Duncan said in the company’s statement that there was a focus on negotiating “better prices” with suppliers, which had helped to hold the gross margin. But this was offset by increased freight costs and shipping delays, resulting from the ongoing global impact of Covid-19.
“During the financial period, significant effort was made to reduce operating costs and inventory levels were well managed to preserve
liquidity,” he said. “The higher inventory balance at year-end is due to goods in transit at the balance date in order to ensure certainty of product availability during the upcoming peak trade period.”
For Hallenstein Brothers, net profit fell to $2.1m, down 56.6 per cent from a year earlier. Sales were $89.9m for both NZ and Australia, dropping just 7.6 per cent from the prior corresponding period.
Online sales grew more than 16.1 per cent over the previous year, with “significant growth” during periods when the stores were shut.
Duncan said the first two months of the 2023 financial year had seen group sales jump by 68.5 per cent from the previous year.
“Last year, there were multiple store closures for much of the eightweek period across Australia and New Zealand due to lockdowns, so the percentage increase is not directly comparable,” he noted.
He said Hallenstein Glasson was looking forward to a year of “comparably minimal” interruptions from Covid-19 and would be refocusing on its key strategies in its digital operation.
“However, there remains margin pressure caused by the US dollar exchange rate and the higher-thannormal freight costs,” he said.
The board declared a final, not imputed dividend of 24 cents per share to be paid to shareholders on December 16. The retailer’s shares closed at $5.20 yesterday, up by 21c.