Hallenstein boosts dividend 8.8%, as full year profit jumps

Hallenstein Glasson [NZX: HLG] lifted its full-year dividend by 8.8%, while reporting a 22% jump in profit, but warned intense retail competition was eroding margins.

Profit rose to $17.4 million in the 12 months ended August 1, from $14.3 million a year earlier, the Auckland-based retailer said in a statement. Sales increased 6.5% to $221.5 million. The board declared a final dividend of 16.5 cents per share, taking its full year dividend to 31c, up from 28.5c a year earlier.

Hallenstein is among retailers that struggled through 2014 in the face of intense competition from online rivals, thrifty consumers and unfavourable weather conditions. Retailers have responded by cutting prices, eroding their margins, to lure back shoppers to their bricks and mortar stores.

The company said sales for the first eight weeks of the current year are up 4% on the previous year but intense competition meant sales were coming at the cost of margin compared to the year-earlier period. Meanwhile, the weaker Australia and New Zealand dollars were also pressuring margins and "the ability to raise price to compensate is limited." It expected to update shareholders at their annual meeting in December.

The retailer has focused on clawing back its market share in a competitive environment, and said menswear chain Hallensteins has firmly cemented its position in the young male fashion market. It reported a 19% increase in profit to $9.6 million, while sales increased 6.8% to $85.6 million.

Glassons NZ, the company's female fashion brand, reported a 17% drop in profit to $6 million, while sales rose 2.5% to $85.7 million. The chain had leadership changes during the year, which caused disruption to the "momentum Glassons was experiencing in the earlier part of the year." New management was working toward recovering lost ground. Storm, its more upmarket womenswear chain, lifted profit 28% to $935,000 and increased sales 4.4% to $9 million.

Glassons Australia turned to a profit of $170,000, from a year-earlier loss of $1.5 million, while sales rose 19% to $41.2 million.

E-commerce sales, which the company said make up 5.4% of total group sales, increased 8.7% in the year. Hallenstein is investing in the channel to earn more of its revenue from online.

Hallenstein shares last traded at $3.51, having fallen from a high of $5.85 in April 2013.

(BusinessDesk)