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

 

Budget Policy Statement: Spending Wins Over Tax Cuts; Big Ticket Items Get Boost

Income tax cuts are on hold as the government says “responding to the earthquakes and reducing debt are currently of higher priority”, although election year tax sweeteners remain possible. More>>

ALSO:

Fishy: Is Whitebaiting Sustainable?

The whitebait fry - considered a delicacy by many - are the juveniles of five species of galaxiid, four of which are considered threatened or declining. The SMC asked freshwater experts for their views on the sustainability of the whitebait fishery and whether we're doing enough to monitor the five species of galaxiid that make up whitebait. More>>

ALSO:

Crown Accounts: Smaller-Than-Expected Four-Month Deficit

The New Zealand government's accounts recorded a smaller-than-forecast deficit in the first four months of the fiscal year on a higher-than-expected inflow of corporate and goods and services tax. More>>

ALSO:

On For Christmas: KiwiRail Ferries Back In Full Operation After Quake

KiwiRail’s Interislander ferries are back in full operation for the first time since the Kaikoura earthquake, with the railspan that allows rail wagons to be loaded on the Aratere now restored. More>>

ALSO:

Comerce Commission Investigation: Prosecutions Over Steel Mesh Labelling

Steel & Tube Holdings, along with two other companies, will be prosecuted by the Commerce Commission following the regulator's investigation into seismic steel mesh, while Fletcher Building's steel division has been given a warning. More>>

ALSO:

Wine: 20% Of Marlborough Storage Tanks Damaged By Quake

An estimated 20 percent of wine storage tanks in the Marlborough region, the country’s largest wine producing area, have been damaged by the impact of the recent Kaikoura earthquake. More>>

ALSO:

ACC: Levy Recommendations For 2017 – 2019 Period

• For car owners, a 13% reduction in the average Motor Vehicle levy • For businesses, a 10% reduction in the average Work levy, and changes to workplace safety incentive products • For employees, due to an increase in claims volumes and costs, a 3% increase in the Earners’ levy. More>>

Get More From Scoop

 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news