The Chairman’s and CEO’s address at the Annual Meeting

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Chairman’s Address to Shareholders on 13 December 2017
Results for the full year to 1 August 2017

The company advises that Group sales for the 12 months to 1 August 2017 were $239.00 million, an
increase of 6.93% over the corresponding period last year ($223.51 million).

The audited net profit after tax was $17.27 million, an increase of 26.24% over the corresponding period
last year ($13.68 million).

The 2016/17 financial year showed solid growth over the prior year with the first half being stronger than
the second half. The improved buying strategy, focus on cost control and a favourable exchange rate led
to the significant net profit improvement. The trading environment was tough in both New Zealand and
Australia, however the brands adapted and responded to these challenges to deliver the strong result.

Glassons New Zealand

Sales for the year were $89.50 million, an increase of 7.16% on the prior year. Although the second half
was not as strong as the first, Glassons New Zealand continued to deliver margin growth. A key driver in
performance over the 12 months was an improvement in fashionability and speed to market which has
continued into the current season. During the year a new store was opened in Christchurch CBD and one
underperforming store in Glenfield was closed. In the new financial year our Queensgate store in
Wellington has been refurbished resulting in an improved trading performance, after the Mall itself
reopened after extensive earthquake damage had been repaired.
April Pokaia was appointed Glassons New Zealand CEO in November and she has been fully immersed in
the brand to ensure a strong result for the peak trading period is delivered. April has taken over from Di
Humphries, and has previously worked with the Glasson business prior to rejoining us.

Glassons Australia

Sales for the year were $50.06 million, an increase of 21.57% on the prior year. The strategy to roll out
the new concept stores in Australia has been successful along with the improved fashionability and speed
to market. This has resulted in continued growth in Australia despite a particularly tough market for
retail. The store portfolio continues to be reviewed and in the last financial year there has been 3 new

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stores opened, 3 non profitable stores closed, and 6 stores refurbished to the new concept format. We
are continuing to invest in Glasson Australia, and in this new financial year have opened our first
Australian CBD store in Melbourne ( Melbourne Central) and a new store in Charlestown near Newcastle.

Hallenstein Brothers

Sales for the year were $91.10 million (including Australia), an increase of 1.89% on the prior year. The
increase was driven by a much improved second half as the brand refocused and continued to
differentiate itself in the menswear market. Hallenstein Brothers continues to build on its established
market position in New Zealand and during the last year has opened 3 new stores in Queensland
Australia. We will continue to review and “fine tune” the menswear chain performance in Queensland
Australia and monitor their performance before opening any further stores. In New Zealand two new
stores were opened in Newmarket, Auckland, and Christchurch CBD and one underperforming store was
closed in The Hub, Hornby, in Christchurch. Performance in Christchurch CBD has continued to improve
with shoppers returning as more stores have opened in the Central City. Hallensteins Queensgate store
has also seen a refit following the Queensgate mall being repaired for earthquake damage.

Storm

Sales for the year were $8.34 million, a decrease of 11.24% on the prior year. Sales struggled to maintain
momentum during the last financial year due to tough trading in a highly competitive segment of the
market. This has not been helped by major infrastructure works around 3 key Auckland stores which has
had a material impact on trade. A review of the brand was carried out towards the end of the year and
the decision made to close the Storm Chapel Street store in Melbourne, Australia and focus the Storm
management team on the brand here in New Zealand. This has seen New Zealand trading improve. A
Christchurch CBD Storm store opened this year replacing the temporary Christchurch Container Store and
a new store was opened in Queenstown. One-off costs associated with the closure of Storm’s Chapel
Street store in Melbourne have been absorbed in the last financial year’s results. Trading continues to be
tough in this sector of the market but emphasis has been placed on re- focusing the Brand on its market
positioning, and improving its product offer.

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E-Commerce

Online sales continue to grow at a significantly greater rate than bricks and mortar stores, as a result of
the company’s commitment to build and invest in digital. For the last financial year online sales
represents over 9% of Group turnover. The growth has continued into the new financial year with
“online” sales representing almost 12% of group turnover. We anticipate this growth will continue
supported by further investment in technology and resources in this area to ensure the momentum
continues in this strategic area of the business.

People

The financial year under review saw Graeme Popplewell retire as Group Managing Director, after an
outstanding career with the Company over many years of service. We again would like to thank Graeme
for his outstanding contribution. We were fortunate to secure Mark Goddard to replace Graeme with
Mark joining us in April 2017. Mark comes to us with an outstanding “pedigree” in the retail industry. He
has worked in various roles in the Australian retail environment, and more recently spent some time
working in Japan. Welcome to you Mark, and we know you will provide the Group with strong, and
innovative leadership, through this dynamic and ever changing retail environment.
Mark has supporting him within the various retail brands management teams, a very talented team of
passionate leaders of which we, the board, are very proud.

Dividend

The balance sheet continues to be strong, with inventories well controlled. Current trading performance
has allowed the company to increase the year end dividend payment.The Directors have declared a final
dividend of 17 cents per share (fully imputed) to be paid on 18th December 2017. Together with the
interim dividend of 14.5 cents per share paid on 13th April 2017 the dividend for the full year is 31.5 cents
per share.

During the year capital expenditure was $12.138 million, which was considerably higher than historic
levels of circa $6 million. This was primarily due to a higher number of new and refurbished stores in
Australia, together with relocating all three brands back to the Christchurch CBD.

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Future Outlook

The first 19 weeks of the new financial year has seen sales grow +16% on the prior year. The improved
buying strategy of the individual brands has allowed the gross margin rate to also increase on last year.
Customers have reacted well to our new seasons product offer and web sales continue to show increased
rates of growth. Should this current trading momentum continue through to 1 February 2018, the full
summer season trading result (i.e. net trading profit) could be more than 50% ahead of the prior year’s
corresponding period. A further trading update will be provided at the end of the summer season,when
actual results are known, in February 2018.

Warren Bell
Chairman of Directors
13 December 2017

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CEO’s Address to Shareholders on 13 December 2017
Results for the full year to 1 August 2017

I am extremely proud and honoured to address you today.
I joined Hallenstein Glasson in April, attracted by the opportunity to join a retailer that is future focused, is
looking to challenge its market position, is prepared to invest in its business and people – and has a very clear
mandate for growth.
As Group CEO, I am acutely aware of the legacy that has been handed to me and to the leadership team. I’m
equally aware of the importance of consistency in performance and growth.
Both Hallensteins and Glassons are brands with long histories. Hallensteins dates back to 1873 with its origin in
Dunedin, and Glassons was started in Christchurch in the 1900s. In New Zealand alone, we now have 44
Hallenstein Brothers stores and 38 Glassons stores and Storm has 10 stores. Across the group, we now have 123
physical stores together with exceptionally strong and aggressively growing web stores.

Despite the diversity of our brands, they all share the common thread of being innovative, creative, brave and
bold. Each brand has a strong and thriving entrepreneurial spirit. This reflects, I believe, the strength of the Kiwi
culture and its tenacity. We are now a global player, but our roots and history, whether from Christchurch,
Dunedin or more recently Auckland, will continue to play a very important part in our future and are a reminder
of our journey.
Whilst the result for 2017 is pleasing, I am delighted with the result so far for 2018. The group has had a strong
start across both New Zealand and Australia, which I believe we have been able to deliver through the
improvements we have made in our buying strategies, our deliberate move to a focus on fashion, our
investment and engagement in digital and our obsession with building on our customer service.

This has been underpinned by our increasing ability to accelerate change and challenge ourselves to be better
and different. We have been working hard on this, and we will continue to do so. This is a key strength within
the group, and it sets us apart from our competition.

Most importantly, however, the performance you see today is a direct result of the quality and passion of the
teams we have across the group, in our offices, our distribution centres, and particularly in our stores, led by the
people introduced to you earlier.

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Strength of our people and teams:

Everyone who works for the group is central and key to each brand’s success and, as a result, to that of the
group. We have outstanding, talented and passionate people and teams.
Our culture is one that we work hard on. We are extremely proud, and protective of our culture that values
empowerment, creativity, innovation and agility. At Hallenstein Glasson we believe in the power of the team
and have a can do attitude.
We are committed to continue building that team, investing in our people and ensuring that we identify and
develop our future leadership with an increased focus on succession and career planning. A clear agenda of
building talent and sustainability across the business.

Across the group we are Customers Obsessed:

We have a unique product offering, store environment and, I believe, service level, within New Zealand and
Australian markets. There is no better reflection of that than when you visit our stores and watch our team
engage with their customers.
Our customers expect us to be the first to bring them the international trends they’re seeing online – often
irrespective of season. They are increasingly connected and engaged globally and aware of what’s on trend. We
know our continued growth and success depends on us delivering the best fashion, at the best value – and that
we must be the first to do so.
To support this, we are building flexibility and agility into our businesses and our sourcing model, and constantly
searching for better and different ways to deliver to our customers the fast fashion they demand.
But meeting customer expectations is not just about the dress or t shirts hanging on a rack. We take our
obligation of being a good corporate citizen seriously and we are working hard to create a more sustainable
business model. As we progress these plans, we look forward to sharing these and our progress with our
customers and with you, our shareholders.

Brand experience and engagement is increasingly important:

Globally we are seeing shopping centres transform into much broader lifestyle offerings, or “entertainment and
experience centres.” While online is, and will continue to be a very significant growth strategy for the Group,
there is no question that our physical stores do and will continue to play a critical and very exciting role in our
future.

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We are ensuring our stores reflect this experiential shift to exceed our customers’ expectations. We are
obsessed with giving our customers the most exciting & engaging experience we can; delivered through great
service combined with innovative and engaging store design and outstanding product.
In the past 12 months we have opened 6 new stores and renovated 4. We have also closed 6 stores as we
continue to review and refine our store fleet to ensure we are in the best current, as well as future, locations for
our customers. We aim to partner with landlords that share our vision.
We are also introducing technology to simplify the store and shopping experience for both customers and our
team – ensuring that we offer an exceptional & exciting retail experience that is seamless and easy.

We continue to Invest in Digital:

We live in a dynamic and highly competitive market where technology is changing the way customers and
retailers interact. The pace of change and disruption is forever accelerating. As a group, we are excited about
these changes and the opportunities that exist to further differentiate ourselves from the competition.
The Board is fully behind our digital strategy and we have accelerated investment into technology to ensure our
goal of establishing a world class online and digital environment, as well as engagement is achieved, and
achieved at pace.
In the last 12 months, we have been working hard on improving the customer experience and how we engage
with our customers, both in store and online.
The last 6 months have been particularly busy. We have moved our marketing strategies away from the more
traditional modes to focus on digital, including social marketing. This allows us to engage better with our
customers on their platform of choice, whether that be Instagram, Facebook or Snapchat. We have held two
extremely successful influencer events that have driven significant sales and engagement.
Online we have improved our website user experience by creating homepages that are customised to the region
where each visitor is located, allowing climate-relevant product to be highlighted.
Other technologies introduced include digital fit guides – helping customers select the product size that is
correct for them - and we have launched rich video content so customers can view videos of the products
they’re most interested in.
In order to make us more customer friendly, we have introduced new, non-traditional payment methods - both
in store and online. This has given our customers greater flexibility in how they pay for their purchases.
In reviewing each brand we have seen solid progress over the last 12 months:

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Glassons

Glassons is asserting its fashion credentials. The team has, and continues to deliver fashion this season with
confidence and speed. I believe this has contributed greatly to our success. Our customers, are becoming
increasingly engaged with the brand as we focus on delivering new collections and trends on a weekly basis. This,
in turn, has also allowed us to reduce our dependency on promotions.
As we have focused on fashion and speed, we have been investing in the development of our online platform to
drive sales, brand awareness and, most importantly, customer engagement. In recognising that we operate in a
global market, we transformed our online offering in August which saw immediate success. We will continue to
invest and evolve our digital presence on a regular basis.
Our move away from traditional marketing to digital, social and influencer events has engaged with our customer
base delivering significant improvements in sales performance, and as importantly, increasing traffic into our
stores. This, in turn, has seen a lift in our same store sales growth.
Whilst we invest in digital, we continue to invest in our stores. We recently opened in Melbourne Central and
Charlestown, New South Wales. Both, I am delighted to say, are performing well ahead of expectation. In New
Zealand, we have recently completed an exciting refit of our Queensgate store.
We are also investing more in our store Teams through training, investment in technology and the support they
need to deliver outstanding customer service, all of the time.

Hallenstein Brothers

There has been a significant improvement in performance so far this season. This turnaround has come as we
focus the business on fashion, first to market and brand building. We continue to transition our model as we
build our leadership position in New Zealand.

Our ranges now drop monthly offering more regular injections of newness and trend product. It is clear from the
areas of success that we are having, that innovation in product and design is key in the menswear market, as has
been seen in our tailored department.

As the business has evolved, we have been confident to reduce our level of promotions and discounts, allowing
a stronger growth in full price sales as well, and pleasingly, in same store sales in our physical stores together
with strong online growth.

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Digital and online continues to grow within the market. We have driven a content rich, personalised customer
experience through emerging trends and technologies and increased brand interactions across social and digital
channels.
Over the past twelve months, we have opened 3 new stores in Brisbane. Australia has challenged us to deliver a
new retail format which requires faster delivery of product trends as well as brand messaging. We are
establishing a formula that ensures the success of the Hallenstein Brothers brand in both Australia and New
Zealand.
People are still very much at the heart of the brand. As previously mentioned, we continue to invest in our
people and their careers. Additionally we have introduced new technologies such as a new app to train and
communicate directly with the whole team, particularly in store. This is supported with a strong development
framework, which is seeing our people succeed and be promoted through the business and across the group.

Storm

Following the disappointing performance last financial year, the focus that we are placing on the brand has seen
sales improve compared to the second half of last year. There is still significant work to be done, however, the
team is committed to ensure the brand returns to growth.

Outlook

As stated earlier, the new financial year has started well and we have seen continuing improvement and growth,
particularly on the last quarter of the previous year.
Our sales growth, as you have heard for season to date stands at +16% vs the same period last year, an
acceleration on the performance we reported in September.
The sales performance has come from our improved buying strategy, focus on speed, fashion and our
customers. This in turn has led to the strong growth in gross profit. Additionally, we continue to have strong cost
controls in place.
Web sales continue to grow well ahead of those of our physical stores, and well ahead of market as we continue
to engage with our customers and invest in technology. In August we announced that web sales contributed
around 9% of sales, season to date they are now sitting at 12% of sales.
The quality of our sales across the group has improved as we continue to see growth in full price product as we
focus on fashion, and our customers. Current stock levels are in line with expectations and will allow us to
achieve our goals over the busy Christmas season. And although it is too early to predict the overall season with

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our busiest period still to come, I am confident that this season will be a success and as Warren stated, net profit
could be above the prior summer season by over 50%.

Importantly though, everything we are doing is very much about the future. We are changing our business and
ensuring the building blocks are in place that will allow us to grow, and grow consistently across both New
Zealand and Australia.
Thank you.

Mark Goddard
Group CEO
13 December 2017