Hallenstein Glasson's Full-Year Profit Increases 53% as Margins Improve

Hallenstein Glasson Holdings Ltd., a New Zealand-based clothing retailer, said full-year profit rose 53 percent as margins improved and in the absence of price cuts to clear stock.

Net income increased to NZ$19.6 million ($14 million) in the year ended Aug. 1 from NZ$12.8 million a year earlier, the Auckland-based company said in a statement. Sales rose 4.5 percent. The profit included a one-time NZ$852,000 charge for changes to tax provisions.

Hallenstein shares have gained 13 percent the past three months after the company said margins were improving because it had expanded its product range and it was being less aggressive with its discounting. A stronger New Zealand dollar reduced the cost of purchasing stock from overseas, it said today.

“Whilst the strength of the New Zealand dollar has undoubtedly been an important factor in achieving improved margin, we cannot overlook the impact of better buying,” Chairman Warren Bell said in the statement. “Real gains in margins have been achieved as a direct result of delivering to the market a more acceptable product offering.”

Pre-tax profit surged 60 percent to NZ$29.2 million, bettering the NZ$28.8 million maximum forecast on Aug. 6.

The company’s Australian stores returned a pretax profit following a loss a year earlier, it said.

Still, the momentum achieved over the past year will be extremely difficult to maintain because the retail environment remains challenging “and we do not see any significant improvement in the near term,” Bell said.

Sales in the seven weeks since Aug. 1 are 5 percent higher than the year-earlier period, the company said, adding that it’s too early to predict first-half earnings.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

To contact the editor responsible for this story: Iain Wilson iwilson2@bloomberg.net

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