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Hallenstein Glassons posts profit despite margin pressures

Hallenstein Glassons reported a bigger net profit during the financial year to August 1, despite facing margin pressures across the group from increased promotional activity in New Zealand and Australia.

The fashion group’s audited net profit, announced on Friday, increased 6.06 per cent over FY18’s $27.36 million to reach $29.02 million, while group sales increased 3.36 per cent to $287.55 million.

Across the group, online sales now represent 15 per cent of total turnover. 

Glassons New Zealand saw sales improve 3.91 per cent in the year to $100.73 million. The brand refurbished a number of stores, including its flagship store in Newmarket, Auckland; Bayfair, Tauranga; Palmerston North and Te Rapa, Hamilton. The renovation of the brand’s The Hornby Outlet Store is expected to finish at the beginning of FY20.

Glassons New Zealand noted it is investing in its digital offer moving forward, and is hoping to enhance customer engagement across both digital and offline channels.

In order to support the expected increase in online sales, the retailer is currently constructing a new fulfilment centre in Christchurch, which is expected to be completed in October.

Sales at Hallenstein Brothers were essentially flat in FY19, growing just 0.26 per cent year on year to $97.33 million. According to Hallensteins, a milder winter and challenges with its product offering, led to a much tougher second half of the year.

“A great deal of work has been done to improve the product offer and we are already seeing an upturn in sales and positive customer feedback for the new season,” Hallenstein Glassons group managing director Mary Devine said in a statement to investors. 

The group has posted a 7.23 per cent increase in sales in the first eight weeks of FY20, compared to the prior year, which includes the contribution of new stores.

“With the recovery of Hallenstein Brothers in New Zealand underway, and with the consistent growth of Glassons in both markets, the focus on the key strategies of speed to market, customer service and investment in digital will continue,” Devine said. 

“However, there remains margin pressure caused by the NZD/USD exchange rate and we are cognisant of the key trading months ahead and the challenging market environment.”

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