CLOTHES STORE owner Hallenstein Glassons says sales are down and it is unlikely to match last year's half-year profit.
The market took the news badly, the shares falling 21 cents to close at $5.40.
Hallensteins warned that intense competition in New Zealand and Australia meant sales for the 16 weeks to November 21 were 2 per cent lower than last year.
Despite improving profit margins, if current trends continued through the key Christmas period it was unlikely to meet last year's results for the six months to February, it said.
It is a turnaround from a "stellar" performance for the previous corresponding half-year, when tax-paid operating profit rose 28.7 per cent to $10.9 million.
One analyst said the result was unsurprising, given a run of bad weather and similar comments from Australian peers such as Just Group.
"I think it's going to be tough over the critical December period for them because of very strong prior- year comparatives."
Last week, Just Group said its first-quarter sales had increased 4.1 per cent, but interest rate rises and cold weather had hit margins.
Also last week, The Warehouse warned of patchy consumer demand, with homewares, grocery, electrical entertainment going well but demand for apparel slowing.
Forsyth Barr analyst Guy Hallwright said earnings had been "probably near peak" for a while. Competition was also increasing on both sides of the Tasman.
In New Zealand, Farmers has moved more into women's makeup and fashion. Just Group's Portmans, Just Jeans, Dotti, Jay Jays and Jacqui-E stores are well established on most high streets, or expanding.
The Hallenstein Glasson statement came as clothing retailer EziBuy opened its first store in Hamilton, as part of a national expansion plan.
In the year to August, Hallenstein Glassons reported tax-paid profits 12.5 per cent higher at $21.71 million.