MARKET CLOSE: NZ shares fall as Kathmandu earnings disappoint, Telecom drops

New Zealand shares fell after outdoor equipment retailer Kathmandu posted earnings that missed estimates, underlining the struggle store owners have in luring consumers. Telecom fell after shedding its dividend.

The NZX 50 Index fell 5.35 points, or 0.2 percent, to 3481.65. Within the index, 25 stocks fell, 14 rose and 11 were unchanged. Turnover was about $115 million.

Kathmandu tumbled 14 percent to $1.62. Profit in the first half dropped 43 percent as margins shrank as it discounted stock to drive a 15 percent gain in sales. Chief executive Peter Halkett it was too difficult to provide specific annual earnings guidance.

"It is a pretty disappointing result - the underlying result was worse than the market was expecting," said Grant Williamson, a director at brokerage Hamilton Hindin Greene. "It indicates a tough operating environment for retailers. Households are continuing to reduce their debt levels and that is hurting."

Pumpkin Patch, the children's clothing chain, fell 1.9 percent to $1.03 and Hallenstein Glasson Holdings, which sells apparel, fell 1.5 percent to $4.

Briscoe Group, which shed its 6.5 cent final dividend today, dropped 1.9 percent to $1.57.

Genesis Research and Development, which is planning a ‘reverse takeover’ of Australian medical researcher Mariposa Health, was unchanged at 2.2 cents after rejecting claims it is insolvent.

The Auckland-based company hasn’t received any questions from shareholders as to its solvency, and “can confirm that it is able to pay its debts as they fall due and continues to be solvent,” chief executive Stephen Hall said in a letter to NZX Market Supervision.

The NZX 50 has now fallen three days in a row from a nine-month high and Williamson said that partly reflects selling by investors who profited from the rally.

Telecom fell 2.8 percent to $2.41, extending its decline from last week, when the stock reached $2.53, the highest since the spin-off of its Chorus network unit in November. The stock is ex-dividend, meaning investors who buy it today aren't entitled to its 9 cents a share interim dividend.

Contact Energy rose 1.1 percent to $4.73. The biggest power company on the NZX 50 fell yesterday after the NZX said it will change the weightings of companies with dominant shareholders, such as Origin Energy's half stake in Contact.

"There is some bargain hunting going on," Williamson said.

Trade Me , the auction website spun off by Fairfax Media, fell 0.3 percent to $3.48, having closed yesterday at the highest level since it went public in December.

"It is probably performing better than most expected," Williamson said. "It is really pleasing to see an IPO so well along with Summerset."

Rest-home investor Summerset was unchanged at $1.52. It reached $1.53 this week, the highest since it began trading in November.