Mild winter hurts Hallenstein Glasson profit
Hallenstein Glasson's annual net profit has fallen 11.2 per cent on the back of a tough winter season that hit its Glassons brand here and across the Tasman.
The listed clothing retailer which includes Hallensteins, Glassons and upmarket womenswear chain Storm, posted an annual net profit of $18.7 million for the year to August 1.
Group sales for the year increased 2.1 per cent to $220m.
The company said the results for the winter season were "disappointing", despite a "satisfactory" result for the first half of the year.
"Both Hallensteins and Storm brands performed to expectations, but Glassons in both New Zealand and Australia have felt the full brunt of a record mild winter and aggressive discounting in the womenswear marketplace during the past six months."
Hallenstein Brothers sales for the year increased 5.3 per cent. Net profit for the menswear division 17.7 per cent, the company said.
Hallensteins continued to redefine its position in the market, making "excellent progress" in a challenging environment, it said.
Storm also increased its sales a net profit for the year, up 24 per cent and 17.2 per cent respectively. The company opened its first Storm store in Australia during the financial year.
However, the Glassons division of the company did not fare as well.
New Zealand sales were down 3.1 per cent, with the winter season proving to be a difficult challenge the company said.
Reduced margin resulted in a 21.8 per cent drop in profit for the year, it added.
In Australia Glassons' sales were down 6.5 per cent for the period, with same store sales dropping 5.5 per cent, the company said.
Reduced margin saw the division's profit decline to a net loss of $1.2m.
The net loss included a pre-tax amount of $500,000 incurred for store relocation and restructuring, the company said.
During the year the company opened three new Glassons stores in Australia and closed one due to a mall refurbishment, the company said.
Sales on the internet continued to grow and would be a key focus for the company, Hallenstein Glasson said.
"Continued investment is being made in this part of the business in both technology and people."
The first seven weeks of the new financial year had been difficult with group sales down 9 per cent on last year, the company said.
"While this period does not have a significant impact on earnings for the future period, it does demonstrate how competitive the environment is at present."
Next month both Hallensteins and Glassons would be relocating to new premises in Lambton Quay, Wellington.
The company also announced a partnership between Hallensteins and Ekocycle - collaboration with music artist will.i.am and The Coca-Cola Company.
The company would be introducing a collection of men's suits as part of the partnership.
While longer term benefits were anticipated it may take some time for the partnership to deliver meaningful financial results, the company said.
Despite the profit decline the balance sheet remained strong, the company said.
Stock levels were comparable with the previous year and the group remained debt free, it said.
The company announced a final dividend of 17.5 cents per share, to be paid on December 6, bringing the total dividend for the year to 33.5 cents per share, unchanged from last year.
The company's shares last traded at $5, valuing the company at $300.6m.
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