Hallenstein Glasson profit up 15%, stock gains

BUSINESSDESK: Clothing chain Hallenstein Glasson Holdings posted a 15% increase in full-year earnings, meeting its guidance as the retailer increased market share. The stock rose 2.4%.

Profit rose to $21 million in the 12 months ended August 1 from $18.3 million a year earlier, the Auckland-based company says, and sales increased 4.9% to $215.6 million. Profit exceeded the retailer's own guidance of $20.4 million to $20.8 million and beat market consensus of $20.4 million.

The stock rose to $4.70 and has gained about 34% this year. It is rated "on hold" based on the consensus of five analysts in a Reuters survey. The board will pay a final dividend of 19 cents per share up from 17 cents last year, taking the annual payout to 33.5 cents. It will be paid on December 9.

"Despite an economic environment in both New Zealand and Australia that can be categorised as anything but helpful to retail all chains in the group performed well and increased market share," chief executive Graeme Popplewell says.

Glassons New Zealand lifted sales by 2.2% to $91 million, while profit increased 5.4% to $10.7 million.

In Australia, Glassons sales rose 9.7% to $39 million. It turned a profit of $397,000 from a loss of $248,000 a year earlier.

"The business in Australia is beginning to show positive returns and further store will be added as sites become available," Mr Popplewell says. "The retail environment in Australia is undergoing considerable change and to some extent the market is experiencing a delayed impact from the global financial crisis."

"While government intervention initially softened the blow that has now played out and we are witnessing fallout at every level." 

Hallenstein sales rose 4.2% to $77.5 million and profit increased 17.7% to $7.7 million.

Profit for the group's Storm outlets rose 47% to $1.3 million as sales increased 25% to $7.5 million.

The company will continue to focus on its online presence as well as improving its bricks and mortar stores. In the past 12 months it refurbished four Glassons stores and opened a Storm store in Dunedin.

Earlier in March, a Glassons store was opened in Melbourne, followed by one in Brisbane.

Sales for the first seven weeks of the new financial year are up 7%, with profitability ahead of last year, Mr Popplewell says.

"While this is a good start, in a macro economic sense there is little on the horizon that suggests the environment in which we operate will materially improve.

"Despite historically low interest rates the consumer remains cautious and has the opportunity with the internet to browse and shop on a truly international stage."