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Greg Smith: Generate investment specialist on Hallenstein Glasson reporting boost in earnings · Best of Business

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  Speaker 1: You're listening to a podcast from Newstalk ZB. Follow this
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  Speaker 2: Now, as I was telling you, business is booming for
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  Speaker 2: Hellensteins and Glassons. The company that owns the two major
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  Speaker 2: chains has reported a net profit after tax of $ 59. 2 million.
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  Speaker 2: That's up almost 50% year on year. Greg Smith is
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  Speaker 2: an investment specialist at Generate and.
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  Speaker 1: With us now.
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  Speaker 3: Hi, Greg. Hi, Heather.
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  Speaker 2: Hey, it's interesting that Australia is doing so well for them,
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  Speaker 2: isn't it?
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  Speaker 3: Yeah, that's true. I mean, certainly they're doing the exact
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  Speaker 3: opposite of what the broader apparel sector is doing, both
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  Speaker 3: in Australia and And New Zealand. And look, I think
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  Speaker 3: Australia is the obvious headline. I mean, that's the growth engine.
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  Speaker 3: Sales up 29%, $ 3. 24 million. That's around about 58% of
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  Speaker 3: group sales. They're expanding stores over there. They've got the
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  Speaker 3: new Sydney warehouse that's come on. That's pretty nice. And
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  Speaker 3: net profit, that was up around about 27% to $ 43. 5 million. But, look,
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  Speaker 3: I think it's easy to look at Australia and think
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  Speaker 3: that's the whole story. I think, look, the New Zealand
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  Speaker 3: business deserves a lot of credit. So, you know, Glaston's
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  Speaker 3: in New Zealand. Sales up 11.5%. And the real impressive
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  Speaker 3: number here is profit, nearly 52%. So it tells us
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  Speaker 3: that this is becoming much more efficient and executing well.
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  Speaker 3: It's quite a tough retail backdrop.
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  Speaker 2: Yeah, I was going to say, I mean, those numbers
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  Speaker 2: seem surprising given that it's bucking the trend of retail, right?
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  Speaker 3: Oh, they're certainly operating really well. I mean, it tells you,
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  Speaker 3: I suppose, they're taking market share as well, right? When
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  Speaker 3: the sector's shrinking, their sales are up almost 20%. And
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  Speaker 3: some might say, oh, well, they're just putting everything on sale.
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  Speaker 3: But that's not true either. Actual gross margins lifted, turned
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  Speaker 3: in 40 basis points to 61.7%. So, customers are actually paying,
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  Speaker 3: you know, sort of full price. So, yeah, I think
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  Speaker 3: it's sort of really impressive. And, you know, even, you know,
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  Speaker 3: the smaller Hellenstein's menswear business, you know, doing quite well
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  Speaker 3: there as well. You know, sales up around about 6%. So, yeah,
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  Speaker 3: turnaround's working. Yeah, market, of course, liked what it saw.
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  Speaker 3: The shares up nearly 6%. That lifted the divvy as well.
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  Speaker 3: And actually, the new financial year started off pretty well
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  Speaker 3: as well here. So, sales were up 18.4% in the
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  Speaker 3: first eight weeks. So, that's pretty impressive. They do acknowledge
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  Speaker 3: that the economic backdrop remains uncertain. Of course, it is. But,
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  Speaker 3: you know, not just surviving a tough reasonable environment, actually flourishing.
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  Speaker 2: Now, have they given, because they've only got about six
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  Speaker 2: Hallenstein stores in Australia, which is not a lot, have
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  Speaker 2: they given an indication as to what their expansion plans are?
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  Speaker 3: No, they haven't at this stage, but you've got to think,
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  Speaker 3: given this result, and they don't actually break out the
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  Speaker 3: proportion of sales at a divisional level, but you'd have
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  Speaker 3: to think, given this result, that might give them some
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  Speaker 3: sort of confidence. I mean, as mentioned, it is a
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  Speaker 3: smaller business, so you look at sales, Across Australia, that's
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  Speaker 3: around $ 114 million. But, yeah, look, heading in the right direction,
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  Speaker 3: you know, single-digit increase. And, yeah, I would think if
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  Speaker 3: Glassons has anything to go by, then, yeah, you would
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  Speaker 3: think that the menswear business can also sort of do
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  Speaker 3: well on both sides of the task.
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  Speaker 1: Yeah, too right.
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  Speaker 2: Might be time for us to go down and get
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  Speaker 2: a $ 199 suit. Greg, thanks very much. Greg Smith, Investment
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  Speaker 2: Specialist at Generate.
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