Hallenstein Glasson, pictured in George St, Dunedin, yesterday, has issued two profit downgrades during the past eight weeks. Photo by Craig Baxter.
A surprise December sales slump has prompted a second profit
downgrade by clothing retailer Hallenstein Glasson, which has
slashed profit guidance by almost 40%.
Following the announcement, Hallenstein's share price plunged
more than 15%, shaving 65c off its share price to trade
around $3.60 and closed further down, at $3.50. Since a
year-high of $5.73 in April, Hallenstein shares had shed
almost 39% in value to trade at $3.50.
It was the second profit downgrade issued by the company
within eight weeks.
Hallenstein chief executive, Graeme Popplewell, said December
sales were down 10% on the previous December and reforecast
after-tax profit for the half-year trading to February would
subsequently be down 39%, falling from $10.3 million last
year to a range of $6 million to $6.3 million.
''The business has actively undertaken a review of the
performance of all brands and identified areas that were a
factor in this downturn. Steps are being put in place to
rectify these areas,'' he said.
Recent retail data, from Statistics New Zealand and also
electronic payments processor Paymark, revealed about a 1%
increase in December electronic retail transactions,
Craigs Investment Partners broker Peter McIntyre said
Hallenstein's sale slide reinforced how fragile the retail
sector remained in general.
''For a long time now Hallenstein's was seen as a safe pair
of hands. This is not the type of [financial] guidance
investors wanted to see,'' he said.
In mid-November, Hallenstein said ''subdued trading'' since
August meant a likely 20% profit downgrade, from last year's
$10.3 million to $8 million, an announcement which also took
the market by surprise.
Mr McIntyre had expected a stronger Christmas period and
full-year after-tax profit to be down only 6%, to $17.6
He noted there was no detail provided on where sales weakness
was experienced, but Hallenstein had previously said most of
the recent decline was felt across its womenswear business.
''We suspect increasing competition from online retailing is
really starting to impact on Hallenstein's,'' he said.
Forsyth Barr broker Suzanne Kinnaird said Hallenstein's
second profit warning followed weak December trading,
negatively affecting sales and margins across all three
''We viewed that trading conditions would remain tough over
Christmas for apparel retailers. However, it proved to be
worse than we, and the company, feared,'' she said.
For its previous full-year, despite a 2% sales boost to $220
million for the year to August, Hallenstein's after-tax
profit fell 11% to $18.7 million.
Hallenstein's trading result for the six months to February
is scheduled for release on March 25.