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.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news