SYDNEY: Gazal Corporation is anticipating its first half earnings for the 2009/10 financial year will be below last year, despite trading ahead of expectations in the first four months of the period.
In an address to shareholders, chairman John Blood said existing forward exchange contracts had been struck at lower exchange rates, so margins will continue to be impacted.
"As these forward exchange contracts run off and subject to there being no sudden deterioration in the US dollar or Australian dollar exchange rate we should expect some margin improvement in the June 2010 quarter," he said.
The fashion group achieved a profit of $6.8 million for the 2008/09 financial, which was down 28.3 per cent on the previous year.
Blood told shareholders that cost cutting initiatives announced at last year's shareholder address had been undertaken in order to improve margins and efficiencies.
"I am happy to report that those initiatives have been largely implemented and the company is in good financial shape going forward with a much leaner workforce."
He said the company is improving warehouse management systems, material handling technology and stock management practices.
Gazal Corporation manages a number of brands including Calvin Klein Underwear, Cyrstelle, Loveable and Davenport.