UPDATE: Hallenstein shares slide 15% after profit warning
Jan. 16 (BusinessDesk) - Shares in Hallenstein Glasson dropped after the clothing retailer warned first-half profit will decline 39 percent after a poor Christmas sales period.
The stock fell 15 percent to $3.62 after the Auckland-based retailer said December sales were 10 percent below the same month a year earlier, and cut its first-half profit expectations to between $6 million and $6.3 million from $10.3 million in 2013.
“It’s a rather tough sector – I still don’t know if we’re seeing any glimmer of hope yet,” said Rickey Ward, head of equities at Tyndall Investment Management in Auckland.
Last month, Hallenstein chief executive Graeme Popplewell said traditional bricks and mortar retailers had to fight against the rise of online offerings, which were part of a fundamental change in the business model.
He is among retailers to have called for the tax department to be more stringent in collection goods and services tax on New Zealander’s purchases from overseas websites.
A strong New Zealand dollar is encouraging kiwis to buy products overseas, where they can potentially get goods cheaper, and Tyndall’s Ward said apparel was particularly vulnerable given the $400 cap on goods attracting duty.
Government figures showed a slump in consumer spending on apparel in the September quarter, with retail sales of clothing, footwear and accessories sliding 6.8 percent in the three months ended Sept. 30, the biggest quarterly fall since the series began in 1995.
Since then, consumer spending on electronic cards, which account for almost two-thirds of retail sales, increased in two of the last three months of 2013.
Hallenstein shares are rated a ‘hold’ based on five analysts polled by Reuters, with a median price target of $4.40.