Retailer Hallensteins Glasson has reported a 40% fall in profit for the six months to February, in line with guidance, with profit margins squeezed in order to maintain market share.
The group's sales were down 2.8%, from $98.5 million for the corresponding period last year to $95.7 million with gross profit on sales down 53.3% and after-tax profit diving 40.7% to $5.48 million.
The 40% profit decline was reflected in Hallensteins dividend, which fell 41% from 17c a share last year to 10c, and its share price held steady at $2.30 yesterday, based on meeting profit downgrade guidance released in February, ABN Amro Craigs broker Peter McIntyre said.
"All retailers have got the `for sale' signs up to move more product from their control inventories and to maintain market share, but at a cost to [profit] margins," he said.
Forsyth Barr broker Peter Young said overall, sales were up in Australia, unexpectedly, but lower than expected in New Zealand.
"We will be marginally upgrading our forecasts, by about $1 million, and the share valuation will rise slightly to just over $3.
"As with most of the other retailers, for those prepared to look through the current downturn, the longer-term value on offer is attractive, but we remain at a `hold' recommendation on the stock," Mr Young said.
Hallensteins, which was founded in Dunedin, at present had $12.1 million in stock, compared with last year's total $16.7 million and like any retailer wanted it "moved and sold", Mr McIntyre said.
