Unseasonal weather hurts Hallenstein Glassons profit

Clothing retailer Hallenstein Glasson has posted a 6.6% fall in full year profit on weaker sales and margins.

The company said a warmer than usual winter saw it aggressively discount to clear stock before the end of the season.

The closure of seven stores due to the Christchurch earthquake also had an effect on sales and margins.

Net annual profit for the year to August 1 was $18.3 million compared with $19.6 million last year.

Hallenstein Glasson declared a dividend of 17c per share, unchanged from last year.

Group sales were $205.485 million, down 0.8% on last year’s $207.14 million.

Chairman Warren Bell said the 2011 financial year was an exceptional challenge, but given the environment the board considered the result satisfactory.


“The second half of the year (winter season) returned an improvement on the second half last year. During February to July we had to contend with the warmest winter recorded in New Zealand for some time, which was not conducive to apparel sales. In addition the Christchurch earthquake resulted in 7 of our stores closed for the balance of the season. Accordingly we believe we have made the most of a trying period.”

The gross margin on sales fell from 56.95% to 56.52%.

Results by Segment
Glassons New Zealand
 profit fell 13.9% to $10.138 million despite an improvement in the second half.

The new flagship store in Auckland’s Newmarket, which opened August 2010, performed to expectations. The company said it planned to refurbish approximately 10 Glasson stores in New Zealand in 2012 financial year.

Glassons Australia
 contributed a net loss of $248,000 for the full year, after a poor first half. However, second half trading saw a profit of $404,000.

The company refurbished seven stores in Australia during the year.

“Results from these stores have been very positive and a further three stores have been completed in the seven weeks since balance date.


“Growth in Australia remains a key strategy, with a further two new stores in the final stages of lease negotiation. One of these will see our entry into the Queensland marketplace which we believe holds strong promise for the future.”

In terms of its other brands, Hallenstein Brothers
profit was $6.594 million, an increase of 9.2%, while Storm profit was $902,000 up 62.5%.

Outlook
Hallenstein Glassons said all parts of the business had traded well since balance date and group sales for the first seven weeks of the new financial year are ahead of last year.

“This represents a solid start to the new financial year but given the volatility and economic uncertainty of the environment we do not consider it possible to project future earnings at this stage.”