New Zealand clothing retailer Hallenstein Glasson Holdings Limited has posted a 25.5% drop in full year profit, and although it beat market expectations has warned of mixed trading in the year ahead. 

For the 12 months to 1 August profit was NZD15.87m (US$10.73m), down from last year's NZD21.31m.

Group sales fell 3.2% to NZD193.75m from NZD200.19m a year earlier.

Chairman Warren Bell says the retail environment became increasingly challenging as the year progressed.

"The cumulative impact of increased fuel, food, mortgage and rent costs on our customers, coupled with a global melt down of financial markets, has seen consumer confidence fall to a low not experienced for many years."

The company, which operates the Glassons women's wear stores, said it has put its Australian store expansion on hold until market conditions improve, but may expand its new Storm women's fashion chain.

Trading for the first two months of the current financial year has been mixed, with sales in Australia up 5% but down 11% in New Zealand.

Overall group sales for the first two months of the new financial year are down 9% on last year.