Broker Forsyth Barr expects shares in Hallenstein Glasson to out-perform from here, following the release of its full year profit.
The company's full year net profit fell nearly 24 percent to $14.3 million, primarily due to poor sales, particularly in December.
Since peaking at $5.85 in April last year, the shares fell as low as $2.77 immediately ahead of yesterday's results. By midday today they were back at $3.10.
An analyst at Forsyth Barr, Chelsea Leadbetter, said the unexpectedly high final dividend of 16.5 cents per share took the full-year payout to $16.9 million, well above the clothing retailer's annual net profit of 14.3 million.
The result was a near 24 percent decline from the previous year ended 1 August.
Ms Leadbetter said the company's strong net cash position of $18.3 million supported the unusually high payout.
She notes potential to expand Glassons and Storm in Australia, but said so far the company's returns on investment across the Tasman had been inadequate.
Her report points to tough trading conditions for the clothing retailer as the shift to online trade brings risks for the company.
Despite the risks, the analyst rates the company as an outperformer, as it seems to have turned itself around from a poor performance in the first half of last year.
The company mostly blamed itself for last year's poor performance but says it has taken appropriate steps to fix its problems.
Hallenstein says its sales for the first seven weeks of the current year are already 4 percent ahead of the same time last year, with all chains performing better than last year, and gross margins have also improved.