Hallenstein, which operates the Hallenstein menswear brand and the Glassons and Storm womenswear brands, reported its net profit after tax is projected at approximatedly $13.5 million, a 22 per cent decrease from the previous year ($17.386 million).
The company reported sales for the 12 months ending August 1 of $223.48 million, marginally above the prior year ($221.52 million).
Graeme Popplewell, group CEO, said while top line sales have been maintained in a very challenging environment for apparel, there were three main factors that caused profit erosion, first, a lower exchange rate has had a negative impact on gross margin which has fallen three basis points from 59.3 per cent in the prior year to 56.5 per cent in the current year.
“We have substantially consumed forward cover at unattractive rates and purchases for the key December trading period will be made at a more attractive rate,” Popplewell said.
Second was the record mild temperatures on both sides of the Tasman during early winter, which resulted in key winter categories failing to match last year sales.
Popplewell said a return to normalised winter temperatures has allowed the company to trade through winter stocks although this had been at a lower that usual margin.
The third factor, according to Popplewell, was difficulties in securing effective management for Glassons business, which had seen a lack of continuity fashionability which has impacted both sales and margin.
“That key issue has been addressed and following the appointment of Di Humphries in April 2016 significant work had been done to address those issues,” Popplewell said. “Since June we have started to see an improvement in performance and we look forward to the new year with confidence.”
The clothing retailer’s cash reserves remain healthy, he said, and future cash flow is projected to be positive.
“Given current trading trends the expectation is that December dividend will remain at historic levels,” Popplewell stated.
Hallenstein Glasson will publish its full profit release on September 23.