SYDNEY: The weak Australian dollar continues to plague intimate apparel giant Gazal, despite the wholesaler renegotiating buying prices with its Asian suppliers.
Gazal said while it is too early to make predictions about its earnings for the second half of the financial year, the weakness of Australia's dollar impacted earnings and cashflow in the first half. This was despite ongoing negotiations with its suppliers and initiatives to pass some of the price increases to its retail clients.
After tax profit was $5.9 million for the six months ended December 2008, down from $6.6 million during the same period last year. Sales revenue decreased 4.4 per cent to $128.3 million.
"The marked weakness in the value of the Australian dollar compared to the exchange rates the company was able to achieve to pay overseas suppliers in the first half will impact margins in the second half," the company says in a statement to shareholders. "As well as having an inflationary effect on inventory holding values."
A slowdown in the department store sector is also believed to have impacted the group's performance, while the embattled construction and mining industries saw a decline in its workwear arm. Gazal says its factory outlet retail stores reported an increase in sales - but not enough to offset the decline in other categories.
Pre-tax profit was further impacted by a one-off cost associated with head office redundancies in November.
Gazal said it would continue to watch expenses and manage inventory levels over time. The Sydney-headquartered wholesaler and retailer operates across sportswear, businesswear, intimate apparel, workwer and schoolwear under licensed and company-owned brands. Fashion labels under the company umbrella include Calvin Klein underwear, Van Huesen, Lovable, Davenport, Crystelle and Bisley.