Outdoor clothing and apparel group Kathmandu (KMD) yesterday revealed a net profit at the upper end of guidance thanks to a cold snap towards the end of June which boosted sales after they had been hit by the long, warm autumn.
The company revealed a full-year net profit of $NZ42.2 million ($A38.3 million) for the year ending July 31, down 4.5%, which was at the top of guidance provided last month.
The shares however dipped by 1.7% to $2.82 despite the better than expected outcome to what was a rough year and second half in particular, especially in Australia.
Investors noted the company’s forecast that injecting more money into expanding in Britain and Europe would offset higher earnings that are expected from its Australian stores.
That helped knock the shares lower after they peaked at $2.92 on the ASX for the day.
KMD YTD – Kathmandu looks overseas as profit dips
The shares didn’t follow the rest of the market higher after the release of those better than forecast figures on the Chinese manufacturing sector.
Earlier in the year Kathmandu was in danger of a much sharper drop in profits after the warmer than expected autumn in Australia and New Zealand saw sales growth slow sharply.
The company said that sales for the year rose $NZ8.9 million, or 2.3%, to $NZ392.9 million, which gives an indication of how slow sales were in the second half.
The company opened 15 new stores in the year, but that wasn’t enough to drive topline sales faster than the 4.2% growth in same store (comparable) sales across the year.
Online sales grew by more than 35% in the year, making an increased contribution to topline sales, and again underlining how slow sales must have been at some of its shops during the second half.
Kathmandu said its Australian stores saw solid same store sale growth of 6.9%, while its New Zealand stores saw an 0.1% dip in same store sales. The smaller British network of stores saw same store sales rise 12.7% and the company is going to invest another $NZ 5 million in expanding its operations in that country.
Earnings before interest and tax (EBIT) fell 4.5% to $NZ64.3 million. Gross margins were flat at a still juicy 63.1% against 63% for the previous year.
Kathmandu declared a final dividend of 9 NZc a share, in line with last year, taking the full year payout to an unchanged 12 NZc a share.
Chief operating officer Mark Todd, who will soon take over as CEO following the recent resignation of long serving boss Peter Halkett, said it was a satisfactory overall result for the retailer given the reduced customer demand experienced during the company’s key selling period in June and the $NZ5.8 million adverse impact of exchange rates.
Chairman David Kirk said the retailer was committed to investing in the brand’s international growth aspirations. "Given this strong position and the scale of our business, now is the right time to begin taking Kathmandu to the world,” he said.
Turning to outlook, Kathmandu said it expects improved earnings from its Australian chain, but overall outcome for the group will be impacted by the UK investment.
