Hallenstein Glasson says competition in the retail market is hotting up and it's having to discount stock to lure in customers.
The listed clothing chain told shareholders at its annual meeting in Christchurch on Tuesday that sales grew 5% in June and July, but those gains have since been eroded, and sales are flat on last year.
Company chairman Warren Bell says the Australian retail market is becoming increasingly competitive and stores are discounting stock to retain market share.
In New Zealand, Mr Bell says, demand has fallen off since the higher GST rate took effect.
He says the company's profit is marginally ahead of last year at the moment, but December will be the make or break month.
The company says it will provide another update after the critical Christmas trading period.
