SYDNEY: Gazal Corporation has announced an increase in after tax profit of $7.034 million for the six months ended December 31 2007, up 4.6 per cent on the previous year.
Sales revenues from continuing operations for the half year ended December 31 2007 were $141 million, up 7.6 per cent on the previous corresponding period.
Gazal CEO Michael Gazal said generally positive consumer sentiment in the retail sector during the period helped the group's key brands Calvin Klein, Van Heusen, Davenport, Bisley and Midford to achieve solid growth in the wholesale business as well as a strong sales result from Trade Secret outlets during the six months.
Earnings before interest and tax (EBIT) of $12.8 million were 25.4 per cent above the previous corresponding half. This excluded a one-off capital gain – during the previous corresponding half - of $2.719 million, realised from the settlement and release agreement reached with Mambo co-founder Dare Jennings in August 2006.
During six months ended December 31 2007, Gazal sold the Mambo trademarks and all intellectual property rights for the European Union, in a move initially announced last October. The announcement in late January 2008 that Gazal had sold Mambo assets - consisting of all Mambo trademarks outside the European Union, as well as the Australian wholesale and retail businesses - finalised the strategic review.
Selling and marketing expenses were higher during the half, Gazal said, primarily driven by higher advertising expenses, $1.9 million above the same period last year. This was mainly as a result of the re-launch of the Davenport brand to capture a larger share of the youth underwear market.
Gazal said a key strategic objective for the group had been to increase its stock turn during the period.
"Closing inventory at the end of the period of $49.5 million was $2.6 million lower than at the same time last year. This combined with an improvement in the collection of trade debtors and an extension of trade creditors in the six months resulted in a reduction of the working capital needs of the Group," he said.
This allowed management to focus on Gazal's core categories: business attire, intimate apparel, underwear, workwear, schoolwear and men's classic sportswear, he said.
Gazal would continue to invest in its core brands and back of house systems to support future growth, he said.