Hallenstein Brothers and Glassons' sales down 32 per cent since February

Wednesday, 13 May 2020

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Fashion retailer Hallenstein Glasson Holdings has announced a massive drop in profit since the spread of Covid-19.

The company, which owns Hallenstein Brothers and Glassons in New Zealand and Australia, has reported a 32.1 per cent drop in sales for the first quarter ending April 30 compared to the same period last year.

In an announcement to the New Zealand stock exchange, the fast fashion company estimated the loss after tax would be approximately $2.8 million.

Hamilton Hindin Greene investment advisor Jeremy Sullivan said the results were better than expected after the company quickly pivoted to online sales during the Covid-19 lockdown.

In New Zealand, Glassons received $2.69m in wage subsidies for 451 staff and Hallenstein Brothers received $2.48m for 415 staff.

In Australia, the company had also accessed job seeker payments.

Glassons and Hallenstein Brothers saw a 32.1 per cent drop in sales during the first quarter of 2020.

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The announcement came ahead of plans for a phased reopening of stores across New Zealand from May 14.

Australian stores had already begun to open.

Hamilton Hindin Greene investment advisor Jeremy Sullivan says the Hallenstein Glassons loss was better than expected.

'With stores reopening this week we anticipate to trade profitably from May onwards although we are expecting that to be at a lower level than the same period last year due to a likely decrease in foot-traffic, increased levels of unemployment and related economic impacts,' the statement from managing director Mary Devine said.

The company had experienced significant growth in its online trading during the coronavirus crisis, Devine said.

'We will continue to prioritise investment in this part of our business,' Devine said.

'We believe that the significant increase in our online business most likely marks a permanent shift in consumer habits in New Zealand and Australia, and we expect our online sales to represent a much larger share of our total sales in the future.'

Hallenstein Glasson Holdings had taken a number of steps to preserve liquidity, she said.

Sullivan said the results were slightly better than the market had expected and shares were trading up 3.3 per cent on the back of the announcement.

But delivery issues being faced by the retailer that could hamper sales.

'That is really slowing down the velocity of money in terms of turnover. You can certainly understand people who have a lot of outstanding orders aren't going to be buying a lot of products,' he said.

Hallenstein Brothers and Glassons had been able to adjust quicker than most, he said.

'The did have a good online platform beforehand, and they have been able to ramp up, but they are still struggling with demand,' he said.