Hallenstein Glasson’s first-half profit slumped 40% as the retailer was confronted by ongoing disruption from the covid-19 pandemic, forcing it to close its doors for much of the period.

Net profit fell to $11.9 million in the six months ended Feb 1 from $19.8m in the same period a year earlier, closer to the high end of guidance. 

The shares fell 1.5% to $6.50 in early afternoon trading on the NZX.

Chief executive Stuart Duncan said “additional cost controls” were implemented to reduce operating costs and inventory levels were “well managed” to preserve liquidity, ending the period at $22.4m compared to $24.4m a year earlier.

Sales fell 6.2% to $170.6m, with the retailer’s New Zealand operations hit harder than in Australia. Glasson NZ sales dropped 13.6% to $53.4m while Glasson Australia’s sales rose 5% to $71.9m.

The retailer has been expanding its Glasson footprint across the Tasman with new stores in Sydney and Canberra, and it’s exploring the opportunity to expand further with other sites in Australia under review.

Sales at the group’s Hallenstein Brothers arm were also down, falling 12.4% to $45.3m.

“The lockdowns in New Zealand significantly impacted the results of the in‐store performance,” Duncan said.

NZ lockdowns had a “significant impact” on the store performance for the Hallenstein brand, although sales growth in its “casual categories” offset the move away in menswear from more formal dressing, Duncan said.

“Casual categories continue to outperform over the financial year with the team continuing to focus on current trends and ‘must have’ products,” Duncan said in his executive’s report.

“Covid‐19 has been the trigger for a significant shift in consumer habits with a far more casual approach taken to what would traditionally be worn in the office and events, and the business has been able to pivot and adapt accordingly.”

Duncan said the trading environment for the first seven weeks of the winter season “remained challenging” with the omicron outbreak in “full swing”. In saying that, sales were 0.5% from a year earlier.

The board declared an interim dividend of 18 cents per share – down 5 cents from last year’s 23 cents per share – which is to be paid on April 14.

The retailer was in negotiations with landlords for rent relief and while some were resolved, others were “ongoing”.