KEY POINTS:
Fashion retailer Hallenstein Glasson is forecasting a difficult year ahead as it battles the weaker New Zealand dollar and higher domestic unemployment.
Chairman Warren Bell told shareholders at the annual meeting in Christchurch yesterday that sales for the period between August 2 and December 14 were down 4 per cent on last year.
"We have seen a slight pick-up of sales during November as falling fuel prices, in particular, reach our consumers' pockets, but the intense battle for the consumer's dollar has meant sales have been achieved on a lower gross margin."
Bell said margin for the half-year to date was running some 2.5 percentage points below last year.
December trading and the lead-up to Christmas, however, remained key to overall performance, although an accurate projection could not be given at this stage.
"However, we can say that given current sales trends, coupled with a drop in gross margin, the profit will be significantly down on last year."
The company expects to provide a further update in late January.
"The world economic recession will take some time to work through, but we have a very strong balance sheet to withstand this difficult time. Longer term, lower interest rates and personal tax reductions must help."
The company's strategy during these times, said Bell, was to strive to maintain market share, while reducing costs at entry level. Stock was at "acceptable" levels, he said.
Bell saw opportunity in the difficulties plaguing the retail sector. Inflationary cost pressures were particularly intense, he said.
"In some situations rents are ratcheting to unsustainable levels and we anticipate there will be likely fallout in some shopping centres where tenants that lack financial resources will find it impossible to continue.
"This will bring to the market new sites that hitherto have been difficult to secure, and we have the financial strength to capitalise on these opportunities as appropriate."
Hallenstein Glasson shares closed down 1c at $2.27 yesterday.
