Hallenstein margin erosion continues though sales rose 3.1%

Hallenstein Glasson Holdings [NZX: HLG], the clothing retailer, said margins continued to erode in the first 16 weeks of the year in the face of "intense competition" and the impact of weaker Australian and New Zealand dollars.

In a trading update, the Auckland-based retailer said sales rose 3.1% in the 16 weeks ended November 22. Still, as noted with the company's annual results in September, "intense competition has meant sales have been achieved at the expense of margin compared to the same period last year."

"The impact of a weaker New Zealand and Australian dollar is beginning to exert margin pressure and the ability to raise prices to compensate is limited," the company said. It didn't provide a trading forecast, saying no real inference could be taken from the 16-week figures given the December trading period "contributes such a large proportion of sales and profit for the season."

The announcement indicates trading has continued in line with how the new financial year began. While posting a 22% increase in full-year profit in September, the company said sales in the first four weeks of the 2016 financial year were up 4% on a year earlier although "intense competition meant sales were coming at the cost of margin."

Chief executive Graeme Popplewell said a further update will be provided in late January.

Weaker local currencies mean the company has to pay more for clothing imported from manufacturing countries such as China. The kiwi dollar has fallen about 16% against the greenback, the transacting currency for many offshore purchases, this year.

Hallenstein shares last traded at $3.79 and have gained 21% this year.

(BusinessDesk)

Jonathan Underhill
Wed, 25 Nov 2015

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Hallenstein margin erosion continues though sales rose 3.1%

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