Mild winter blasts profit
Investors will not be disappointed with Hallenstein Glasson's drop in annual net profit, a broker says.
The listed clothing retailer which includes Hallensteins, Glassons and upmarket womenswear chain Storm, posted an annual net profit of $18.7 million, down 11.2 per cent for the year to August 1.
Hallenstein Glasson was hit by a tough winter season that damaged the earnings of its Glassons brand here and across the Tasman. Group sales for the year increased 2.1 per cent to $220m.
Grant Williamson, director of sharebroking firm Hamilton Hindin Greene, said despite the profit drop it was still a "pretty solid" result.
Hallenstein Glasson continued to perform relatively well in the face of the economic environment, he said. However, the company described the winter season results as "disappointing", despite a "satisfactory" start to the financial 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 Glasson said.
Hallenstein Brothers sales for the year increased 5.3 per cent. Net profit for the menswear division rose 17.7 per cent, the company said. Storm also increased its sales and net profit for the year, up 24 per cent and 17.2 per cent respectively.
However, the Glassons division of the company did not fare as well, with competition reducing margins and lowering profit 21.8 per cent for the year.
New Zealand sales were also down 3.1 per cent following the challenging winter season.
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 produce a net loss of $1.2m. The net loss included a pre-tax amount of $500,000 incurred for store relocation and restructuring.
During the year the company opened three Glassons stores in Australia and closed one because of a mall refurbishment. Williamson said the company was right to continue to expand its footprint and invest in the Glassons brand as diversification was important. "They seem to go through periods where one brand performs better than the others."
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. Its share price closed down 11c in yesterday's trading to $4.93 per share.
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