Hallenstein Glasson looks to Australia for further growth

Tuesday, 10 December 2024

Hallenstein Glasson Holdings experienced a bumper year and is on track to see its sales continue to tick upwards as it realises growth opportunities and opens more stores in Australia.

The NZX-listed retail company that operates 130 stores, including 38 in Australia, says sales in the 18 weeks of the new financial year were strong - and it had been encouraged by growth of its Australian business.

Hallenstein Glasson posted a record profit of $34.5 million in the year to August 1, up 7.8% compared with the $31.9m posted in the previous financial year.

Its sales hit a record $435.6m, up 6.3% from $409.7m a year earlier.

Online sales now make up 18.2% of group turnover.

Glassons Australia’s sales grew by over 14% in the year and is now equal to that of the New Zealand business across the two brands - menswear chain Hallensteins and womenswear chain Glassons - combined.

The company’s share price is up 26% across the year, sitting at $7.22.

Chairman Warren Bell said it was a “pleasing result” given the difficult retail trading environment, particularly in New Zealand, and the company had a strong balance sheet as it progressed sales in the new financial year.

Hallenstein Glasson will pay a final dividend of 26.5 cents per share, taking the total dividend for shareholders to 50.8 cents per share.

“We are very proud that in this market we're able to keep paying improved and increased dividends, given that a number of other New Zealand companies haven't been so fortunate and have either reduced or even suspended dividend payments,” Bell told shareholders at the company’s annual general meeting in Christchurch on Tuesday.

Hallenstein Glasson has been an anomaly among publicly listed retail companies - one of the only companies in the FY24 financial year to have increased sales and profit - and pay out a dividend - despite difficult trading conditions in industry, driven by conservative consumer spending.

The company’s retailers have focused on producing on-trend fashion clothing targeting 18 to 30-something-year-olds, buying closer to the market and therefore reducing their need for discounting activity.

Group chief executive Chris Kinraid said FY24 had been a “big milestone” for the group, with sales surpassing $435m for the first time.

“Our team's relentless efforts have driven significant growth, even in one of the most challenging retail environments in recent history, so we're really proud to achieve such a strong result against these strong headwinds,” Kinraid told shareholders.

“Despite unfavourable exchange rates, we've expanded our gross margin by 210 basis points. This was made possible through close collaboration with existing suppliers and the introduction of new partners, allowing us to diversify our supplier base and enhance capabilities. Our teams have been laser focused on improving supplier lead times and buying closer to the market, resulting in reduced clearance activity and discounting.”

At the meeting, shareholders were supportive of the company’s recent efforts and financial performance. Many had congratulatory comments to share and even broke out in applause for management at one point.

In the first 18 weeks of the new financial year, Hallenstein Glasson group sales were up 10.1%, compared with the same period last year.

The group is now focused on growing its business and the number of stores in Australia. It plans to open between two and five more Glassons stores in Australia each year over next 3 years, with an aim of 50 stores in that market within the next three to five years.

Glassons has 34 stores across New Zealand, which performed well despite difficult trading conditions, chairman Bell said. It achieved an after-tax profit of $10.8m in the year, a small decrease on year before.

Hallenstein Brothers has 42 stores across New Zealand and five in Queensland, Australia. It generated $175m in sales, a 1.3% increase in the prior year, and generated a $5.3m after-tax profit.

Bell said a partnership with The Warriors was driving growth for Hallensteins, along with a brand ambassador All Black Will Jordan.

Former Popeyes NZ boss James McLauchlan made his debut at the annual meeting, having recently swapped fast food for fashion when he joined Hallensteins as chief executive last month.

McLauchlan was previously the New Zealand general manager of Popeyes, bringing the US southern fried chicken brand to the market for the first time. He was the face of the brand when it launched in April under Tahua Partners. Prior to that, he spent a period of time overseas working across other retail hospitality businesses, including Hungry Jacks and Burger King.

Hallenstein Glasson anticipated the retail sector would continue to face challenges ahead, driven by restrictive interest rate settings and external factors internationally that would continue to add pressure to freight costs and supply chains, Kinraid said.

“Despite these obstacles, we've had a very positive start to the new financial, and we're in a bold position to adapt to market conditions.

“With a crucial four weeks of Christmas trading still ahead, this result shouldn't be taken as indicative for the full season,” he said.

“By maintaining a straightforward approach and a responsive culture to customer needs, the group is well positioned to navigate the complexities in the current environment ahead and achieve our growth objectives.”