Main street clothing retailer Hallenstein Glasson has delivered a surprise forecast of an expected 20% profit slump, prompting shareholders to sell off stock after the announcement.
In a market update yesterday, chief executive Graeme Popplewell said the first 14 weeks of the present financial year, from August 1, were ''subdued'', with group sales down 7% on the same period last year.
''August and September were particularly challenging, but as the summer season has unfolded, sales have been more in line with historic levels in both New Zealand and Australia,'' he said.
Craigs Investment Partners broker Peter McIntyre said the downgrade ''took the market and shareholders by surprise'', given the company had been trading well in recent times.
Hallenstein shares dipped almost 5% after the announcement, down by 23c to $4.77.
''Investors will have some questions about management, having been so good for so long in dealing with inventory and the competition,'' he said.
He said the ''surprise'' was in comparing The Warehouse and Briscoes with Hallenstein, albeit servicing slightly different retail operations, with recent retail figures from Statistics New Zealand this week.
New Zealand retail sales grew less than economists were picking in the September quarter as growth in car and auto part sales were offset by weak consumer spending in the core sectors, The New Zealand Herald reported. The seasonally adjusted value of retail sales, which does not adjust for price changes, rose 0.6% to $18.18 billion.
The total volume of retail sales rose 0.3% for the quarter ended September, from a 1.5% pace in the June period, which was revised down from 1.7%.
That missed the 0.9% volume growth forecast in a Reuters survey of economists. Mr Popplewell said that, based on current trends, the after-tax profit for the six months ending February 2014 would be about $8 million, a 20% decrease on last year's $10.37 million result.
Mr McIntyre said Hallenstein's was trending against the retail data, and he expected management would be updating investors again at its annual shareholder meeting, scheduled for December 12.
''It goes to show just what effect two slow months can have and how competitive the retail market continues to be,'' he said.
