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Hallenstein lifts profit 40% as it claws back market share

27 Mar 15

Hallenstein Glasson, the fast-fashion clothing chain, lifted first-half profit 40 percent, beating its guidance, as it clawed back market share in a competitive retail environment.

Profit rose to $8.6 million in the six months ended Feb. 1, up from $6.2 million a year earlier, the Auckland-based company said in a statement. That's above the $8.1 million to $8.3 million range it gave in January. Sales rose 4.1 percent to $110.9 million, while costs slipped 2.1 percent to $43.9 million. The retailer lifted its first-half dividend to 14.5 cents per share, from 12 cents per share a year earlier.

Hallenstein has been one of a number of retailers that struggled through 2014 in a tough trading environment as they faced intense competition from online rivals, thrifty Australian consumers and unfavourable weather conditions. Retailers have been squeezing margins to offer discounts in a bid to lure back shoppers to their bricks and mortar stores.

"We are pleased with the progress we have made in regaining market share," said chief executive Graeme Popplewell. "The critical trading period of December and January was particularly robust, and we have seen that momentum carried forward into the first few weeks of the second half of the year. "

The summer boost to sales had flowed through to the first seven weeks of the new season, with sales up 14 percent on last year, Hallenstein said. It was premature to forecast for the winter season, as it had only just begun, but each chain was "in a strong position to capitalise on results so far and are approaching the season with confidence."

The company's menswear chain, Hallensteins lifted its first-half profit 52 percent to $5.8 million, while its sales increased 5.3 percent to $45.3 million. The brand has embarked on a marketing campaign to grab back its market share, which had lifted its early winter sales, the retailer said.

The New Zealand operation of its Glassons womenswear brand reported a 12 percent drop in profit to $2.3 million, as its sales were little changed at $41.3 million. Meanwhile, Glassons Australian operations narrowed its first-half loss to $184,000, from an earlier loss of $1.2 million, as sales lifted 10 percent to $19.9 million. The chain has also boosted marketing, including launching concept stores in Australia, to lift brand awareness. Sales since December had turned around and continued into the new season, Hallenstein said.

The company's Storm brand, which targets an older demographic than Glassons, doubled profit to $431,000 while sales increased 1.5 percent as it narrowed margins through tighter buying, the retailer said.

Shares of the company advanced 5.3 percent to $3.40, and have gained 2.9 percent since the start of the year.

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