KEY POINTS:
Listed clothing retailer Hallenstein Glasson has seen full-year profits fall by a quarter as discretionary spending falls out of fashion with consumers.
The company - which a fortnight ago lost its chief executive of six months - yesterday announced an audited net profit after tax of $15.9 million for the year ending August 1.
The result exceeded its July market guidance of $15 million, but was still down 25.5 per cent from last year's $21.3 million.
Group sales were $193.7 million, down 3.2 per cent on the previous year.
And more pain could still filter through to its 2008-09 results. Overall group sales for the first two months are down 9 per cent. New Zealand sales have fallen 11 per cent, but was partially offset by a 5 per cent rise in Australian sales.
Chairman Warren Bell said it was too early to predict profitability for the current half, although the $9.97 million tax paid profit achieved last year was unlikely to be repeated.
"The Australian economy appears more resilient than New Zealand, although the prospect of tax cuts, further interest rate cuts, and potential election promises may see the New Zealand retail environment improve in the latter part of this year." Bell said the retail environment had become increasingly challenging as the 2008 calendar year progressed.
"The cumulative impact of increased fuel, food, mortgage and rent costs on our customers, coupled with a global meltdown of financial markets, has seen consumer confidence fall to a low not experienced for many years."
Its strategy, said Bell, was to reduce costs, while maintaining market share and balance sheet strength. He said retail businesses were facing intense cost pressures, particularly from rising rents, but said the company was well-placed to take advantage of the opportunities this created.
"The impact of the CPI-based annual rent increases ... cannot be underestimated. In some situations rents are ratcheting to unsustainable levels. We anticipate there will be fallout in some shopping centres where tenants will find it impossible to continue. This may well open up new previously difficult to secure sites, and we have the financial strength to take advantage of these opportunities."
Bell said the company still intended to develop Glassons' presence in Australia, but store roll-outs have been put on hold until market conditions improve.
Plans to establish a Melbourne-based buying team were, however, continuing.
It is opening a new outlet for its fledgling Storm women's fashion stores in Milford, Auckland next month, with further site expansion a possibility, said Bell.
A final dividend of 10c per share was declared, taking total dividends for the year to 27c per share. Last year, it declared a total dividend of 35c per share.
Hallenstein Glasson shares closed unchanged at $2.87.
HALLENSTEIN GLASSON
Year ended August 1
Revenue
2008 - $193.7m
2007 - $200.2m
Net profit
2008 - $15.9m
2007 - $21.3m
