The group, which operates chains of clothing stores, said that sales for the winter season had continued to be under pressure from a deteriorating retail market in both New Zealand and Australia.
Group sales were down 6% this winter when compared with last year.
Profit after tax for the year to August 1 was now expected to be about $15 million, down from $23.1 million.
Chief executive officer Shayne Quanchi said the change in the retailing climate was the result of consumer reaction to increased fuels and food costs and higher mortgage interest rates.
"The current environment is the most challenging experienced for a number of years. There is fierce competition for consumers' wallets."
As a result, margins were being squeezed and every effort was being made to control stock levels.
The company's business model was based on high stock turn, so it expected to end the season with stock levels "in good shape", he said.
Hallenstein Glasson shares last traded at $2.55, down 14c or 5%, having been $4.80 a year ago.
Forsyth Barr broker Peter Young said the downgrade followed profit warnings or downgrades from The Warehouse Group, Briscoe Group, Pumpkin Patch and Michael Hill International.
"Obviously, there is a common theme here of downgrades due to an economic downturn.
"The price of petrol, interest rates and rising groceries are all having an effect on spending habits in the retail space."
Late last month, Briscoe said net profit for the six months to July 27 would be between $2 million and $3 million, as difficult trading conditions continued.
In May, the company warned first-half net profit could halve from last year's $10.5 million.
The Warehouse revised its expected after-tax earnings for the year to July 27 down by about 10%, to between $84 million and $88 million.
The previous range was $94 million to $98 million.
Pumpkin Patch's share price had not escaped the downturn and was down 55% on a year ago.
Michael Hill reported in April that its nine months' sales showed moderate growth of 6.2%.
Same store sales growth for the nine months was again down in all markets.
