Hallenstein cuts profit outlook

File photo

Hallenstein Glasson Holdings, the clothing retailer, has downgraded its profit outlook as weaker sales at its Glassons outlets sapped stronger performances from the company's Hallenstein and Storm brands.

The retailer expects to post profit between $7 million and $7.4 million in the six months ended Feb. 1, a decrease of 13 per cent to 18 per cent on the previous year's profit of $8.5 million, it said in a statement today.

Group sales for the period are projected at $100.6 million, down from $102.3 million previously.

Chief executive Stephen Timms said Glassons had experienced difficult trading in both New Zealand and Australia, with the women's fashion market facing fierce competition.

The Hallenstein and Storm stores had performed better than last year during the December and January trading months, he said.

National core retail sales shrank 2.4 per cent in December, according to government data, with inflation figures showing price rises in service sectors outpaced those in goods in the December quarter as retailers were forced to discount items in a bid to attract uninterested shoppers.

Consumer spending has been in the doldrums as households continue to use historically low interest rates to repay debt rather than ramp up expenditure.

The retailer said sales at Hallenstein stores rose 3.5 per cent between August and January 23, with same store sales up 5 per cent, while sales at Storm outlets grew 28.5 per cent, with same store sales up 5.2 per cent.

That was offset against Glassons New Zealand, where sales fell 5.4%, with same store numbers declined 7.1 per cent, and Australian operations saw sales and same store sales decline 9 per cent.

Despite the reduced earnings, the company said its strong balance sheet and liquidity position would enable it to maintain the dividend flow at a rate similar to last year.

The complete interim results will be released to March 24.

Shares were unchanged yesterday at $4.10. The stock was one of the top 10 performers on the NZX 50 last year, having gained 24 per cent in 12-months.