Apparel group Gazal has posted a 9.2 per cent sales increase and a 9.5 per cent lift in after-tax profit for the six months to December 31, 2011.
The company, which last year sold its underwear labels Lovable, Davenport, Kissed by Lovable and lifestyle brand Trent Nathan, today reported an after-tax profit including discontinued operations of $7.1 million.
Excluding discontinued operations, after-tax profit from continuing operations was $7.9 million for the period, an increase of 49.2 per cent on the previous half year. Sales revenue from continuing operations for the six months also increased to $141.7 million from $129.8 million compared to the previous corresponding period.
Net cash proceeds from the sale of discontinued businesses in the period were $11.5 million, with most of this used to reduce net debt levels, which have put the company's balance sheet in a healthy position with some surplus cash.
In a company statement Gazal said the sale of the Trent Nathan trademark and licensing business along with the sale of the Brands United outlet stores – including Lovable, Davenport, Kissed by Lovable – “has resulted in fewer businesses to run and a simpler structure going forward which allows management to focus their efforts on driving further growth from core continuing operations”.
The wholesale segment of Gazal's operations recorded mixed results. While domestic sales of its Bisley Workwear brand continued to grow compared to last year, offshore contracts which buoyed the bottom line last year were not replicated in this half.
Although sales growth was also achieved across remaining underwear brands Calvin Klein and Nancy Ganz, as well as shapewear label HoldMeTight, overall, profit margins in the wholesale business were lower compared to the previous period.
Revenue in the direct-to-consumer segment, however, increased due to solid performances from Gazal's corporate uniform business and off-priced outlets.
Going forward, the company said that, subject to there being no sudden deterioration in consumer spending, it expects earnings for the full financial year 2012 to be ahead of last year, however, “given some of the global economic uncertainties, general trading conditions are likely to be somewhat mixed for the second half”.