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Hallenstein Glasson Lifts Trading Profit 19.5%

14 September 2005

Hallenstein Glasson Lifts Trading Profit 19.5%

Growing success in Australia topped off a memorable year for fashion retailer Hallenstein Glasson, which lifted audited after tax profit by 12.4% to $19.297 million (2004:$17.167 million) for the 12 months ending 1 August 2005. After adjusting for a one off gain on the sale of property of $1.012 million last year, profit from trading lifted 19.5%.

This lifted earnings per share by 3.6 cents to 32.7 cents.

Directors have announced a final, fully imputed dividend of 17 cents (14 cents last year) bringing the full year's dividend to 30 cents, up 6 cents or 25%.

Chairman Warren Bell said the company's strong financial performance demonstrates that it had got the retail formulae right for the quite separate New Zealand and Australian markets, and that the potential for future growth in both countries, particularly Australia, was "encouraging".

"For the second straight year, trading profit showed double digit improvement - plus 41% in 2004 excluding a $1 million property gain, and plus 19.5% this year," he said.

"New Zealand delivered yet another excellent result, with an after tax trading profit contribution of $18.985 million, up 16%.

"In Australia we posted an after tax profit of $312,000 (compared to last year's loss of $261,000). While still modest, we have now traded profitably in Australia for three consecutive six-month periods, and the last six month performance has shown continued improvement.

"Our merchandise has fashion credibility on both sides of the Tasman, and our clothing is seen as being totally contemporary with the latest North American and European trends."

Same store sales in New Zealand increased by 4.36% and by 14.39% in Australia. Total sales in Australia increased 23.83%. Total Glassons and Hallensteins store numbers in New Zealand remained unchanged, while in Australia an additional 3 stores were added during the year. Total revenue increased 1.7%, however 2004 revenue included HBK Girl chain sales prior to it being disposed of in May 2004.

Group Managing Director Cliff Kinraid said New Zealand's 46 menswear and 31 womanswear stores had improved sales performance through strong branding and marketing, a more extensive range, and a flexible, responsive buying strategy.

"Hallensteins will continue to develop larger format stores as opportunities exist, with two potential sites under consideration. Glassons strategy to increase market share by expanding the product range and increased selling space in key locations would also continue," he said.

"Our buying strategy ensures that we are always focused on reflecting both current and emerging overseas fashion trends.

"In Australia we have learnt from our earlier experience, and in the next 12 months our aim is to open further Glasson stores, increasing our presence in New South Wales, Victoria, and explore opportunities in Queensland. A new store will open in Parramatta, Sydney on September 17, and a further store is planned for opening in the newly refurbished MacArthur Square, Sydney, in February 06, taking total store numbers to 20. Further sites are under active consideration.

"We have the infrastructure in place to support this level of growth, and more, without significantly adding to our non-store support costs."

Mr Bell said that the outlook for the company was positive on both sides of the Tasman.

"The growth potential in Australia is exciting, and the more we grow the greater the economies we will achieve as critical mass increases.

"Rising costs in the form of higher fuel prices and uncertainty with the exchange rate with the US dollar are a challenge, but our flexible, responsive buying strategy enables us to preserve margins while keeping prices to customers at acceptable levels."

The company's donation to the Breast Cancer Research Trust, based on sales of designer T shirts, was $750,000, up 50% on that for the previous 12 months. This brings the total donation to the Trust to date to in excess of $1.5 million.


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