Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Hallenstein shares drop to 4-year low on rag trade woes

Hallenstein shares drop to 4-year low as profit warning highlights ailing rag trade

By Paul McBeth

Jan. 17 (BusinessDesk) - Shares in Hallenstein Glasson sank to a four-year low after the clothing chain slashed its first-half earnings outlook on tepid Christmas sales, in another sign the rag trade is struggling to recover from a protracted downturn.

The stock dropped 8.6 percent to $3.20 and earlier touched $3.10, the lowest since December 2009, adding to yesterday’s 18 percent slide when the Auckland-based company warned earnings will fall to between $6 million and $6.3 million in the six months ending Feb. 1 from $10.3 million a year earlier.

Last year the retailer had been among a group of clothing chains who gave profit warnings as tough competition in Australia put a squeeze on margins and as the warm winter kept consumer spending on apparel under wraps. Hallenstein chairman Warren Bell had warned of a possible further downgrade at the annual meeting on Dec. 12 unless sales picked up in the crucial peak summer trading period.

“This is the third profit warning they’ve had in a few months,” said Mark Warminger, who helps manage $710 million in New Zealand equities at Milford Asset Management in Auckland. “Apparel retailing is tough across New Zealand and Australia.”

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, and the New Zealand Institute of Economic Research’s December quarterly survey of business opinion showed merchants reported the strongest retail sales since September 2002

Milford’s Warminger said with the exception of outdoor equipment chain Kathmandu, the local retail sector is fairly unattractive for investors and still faces structural issues.

“Through the global financial crisis people got used to buying things in a sales period or at a discount,” he said. “That’s continued through for the last couple of years, even though the economy’s recovered.”

Apparel retail stocks struggled over the past year relative to the NZX All Index, which gained 15 percent. Shares in Hallenstein are down 35 percent over the past 12 months, Pumpkin Patch dropped 49 percent and Postie Plus shares halved.

Other retailers haven’t fared as poorly, with shares in Warehouse Group up 21 percent over the past year, and Kathmandu climbing 61 percent.

One of the issues facing retailers is finding the balance between a physical store presence and online offerings, something Hallenstein chief executive said in November 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.


© Scoop Media

Business Headlines | Sci-Tech Headlines


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news