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Shares in clothing retailer Hallenstein Glasson fell out of fashion yesterday after advising full year earnings could fall around 30 per cent.
The company said sluggish winter sales meant profit after tax for the year ending August 1 is now expected to be approximately $15 million, down from $21.3 million last year.
Its shares dived 19c to $2.50 shortly after the market opened, but recovered slightly to close down 9c at $2.60 - well below the year high of $4.75. The share price has lost around 33 per cent over the past year, the second-worst performing retailer in the benchmark NZX-50 index behind Pumpkin Patch.
Hallenstein Glasson is the third listed retailer to slash earnings targets, following announcements a fortnight ago by industry bellwether Briscoe Group and discount retailer The Warehouse Group.
All have been hit by a marked fall in consumer confidence, and a squeeze on household budgets. Last week, Treasury said rising fuel, food and credit costs have stalled retail spending, and may have tipped the economy into a recession in the first half of the year.
March quarter figures for retail sectors from Statistics New Zealand show widespread decline, with those reliant on discretionary spending hurting the most.
Furniture and floor coverings took an 11 per cent dive from March last year, appliance retailing is down 15 per cent, and clothing sales have fallen 6 per cent.
Hallenstein Glasson said winter season sales continued to be under pressure in New Zealand and Australia, with group sales down 6 per cent to date.
"The current environment is the most challenging experienced for a number of years. There is fierce competition for consumers' wallets. As a result, margins are being squeezed and every effort is being made to control stock levels," said chief executive Shayne Quanchi.
"Our business model is based on high stock-turn, so we expect to end the season with our stock levels in good shape."
The company is in the midst of moving the buying function for its Glassons stores from Christchurch to Melbourne, with the key buying team of five people relocating from October.
TRENDING DOWN
* New Zealand and Australian winter season sales for Hallenstein Glasson have fallen 6 per cent to date.
* The company expects profit after tax for the year ending August 1 to be approximately $15.0 million.
* Full-year profit after tax last year was $21.3 million.
