Hallenstein Glasson Holdings Limited Analysis

Overview

The present company was the vehicle for the merger of Hallensteins and Glassons retail chains in 1985. The company's stores cater for the medium priced-quality end of the market, and the group's property assets are principally occupied by Hallensteins and Glassons stores.

In June 2003, the company decided to withdraw its Hallensteins menswear chain from Australia and focus expansion on the Glassons womenswear chain.

In March 2004 it agreed to sell its HBKGirl outlets. In September 2007 the group's total stores stood at 111, including 25 in Australia.

In May 2008, HLG moved its Glassons buying team to Melbourne for the purposes of moving its `core function' to the `growth opportunities' that are present within the Australian market.

Performance

The following information was extracted from Hallenstein Glasson Holdings Limited's half year results, released on 28 March 2024:

UNAUDITED RESULTS FOR 6 MONTHS ENDED 1 FEBRUARY 2024

The Company advises that unaudited total Group sales for the six months to 1 February 2024 were $223.0 million, compared to $223.3 million in the prior corresponding period. Group unaudited net profit after tax (NPAT) was $21.1 million, an increase of 1.5% over the corresponding period last year ($20.8 million). The result is in line with the guidance announced to the NZX on 22 February 2024.

Gross margin on sales was 58.9% compared with 56.5% in the prior corresponding period. The improved profitability at the margin level has been driven by ongoing sourcing benefits with our long-standing supplier relationships, and the development of new relationships to diversify our supplier base. Net freight costs reduced throughout the period leading to a reduced landed cost of product. Inventory management has been improved, with lower clearance levels year on year reducing overall discounting. These factors have assisted us in improving margin while continuing to manage a strong US Dollar exchange rate throughout the half.

During the six months to 1 February 2024 there was a continued focus on operating cost efficiency given the high inflationary environment. Inventory levels were tightly controlled and ended the period lower than both the prior corresponding period and the prior year end. This gives the Group the flexibility to adjust to the trading environment and trends as the market evolves.

The balance sheet remains in a strong position with improved working capital compared to the prior corresponding period and significant cash reserves.