5 Aug 2009

Price cuts lead to fall in profit for Hallenstein Glasson

12:46 pm on 5 August 2009

Hallenstein Glasson says its full year profit is likely to drop by about a quarter due to intense competition, as firms battle to attract shoppers during the economic downturn.

The clothing retailer expect earnings to range between $12.2 million and $12.4 million in the year to August.

Retailers have struggled in the last year and a half as consumers keep a tighter rein on their spending, forcing businesses to cut prices and inventories to stay afloat

Hallenstein Glasson says sales rose 2% to $198 million in the year to the beginning of August, with a pick up in the second half of the year making up for a dismal first six months.

The retailer says an early winter boosted sales and confidence has gradually returned on both sides of the Tasman.

It also benefited from government handouts in Australia.

But the rise in sales has been at the expense of profit margins, as Hallensteins cut prices to attract customers into its stores.

Profit fell 40% to $5.5 million the first six months of the year and the retailer is picking a flat second half profit of $6.6 million.