Winter trading woes have struck clothing retailer Hallenstein Glasson, which has signalled flat sales and expects a decline of more than 20% in after-tax profit for the year.
Hallenstein group chief executive Graeme Popplewell said sales for the year to August were only ''marginally above'' last year, up from $221.5million to $223.4million, but after-tax profit is projected down 22%, from $17.3million a year ago to $13.5million.
''Record mild temperatures on both sides of the Tasman during early winter resulted in key winter categories failing to match last year sales,'' he said in the market update yesterday.
Several New Zealand retail clothing companies have been caught out during the previous two warmer-than-usual winters, holding unsold stock which had to later be cleared at reduced profit margins.
Craigs Investment Partners broker Chris Timms said while the 22% profit decline was 7% below market consensus, it was within the range of expectations of Craigs.
A full profit report is due from Hallenstein's on September 26.
Mr Popplewell said a return to normal, colder winter conditions meant the company could trade through its winter stocks, albeit at a lower-than-usual profit margin.
He also noted a lower exchange rate meant a negative impact on gross margin, which fell 3 basis points from 59.3% to 56.5%.
While foreign currency hedging contracts had been at ''unattractive rates'', contracts covering purchases for the key December period would be made at a more attractive rate, he said.
Hallenstein's dividend is expected to stay at historical levels.
He described Hallenstein's cash reserves as ''healthy'' and expected future cash flow to be positive.
