Kathmandu Flags New Profit Rise

Outdoor clothing retailer Kathmandu has boosted its forecast profit for 2015-16 for a second time in five weeks.

After issuing an update and profit boost on June 30, the company yesterday told the NZ and Australian markets that it now expects full-year profit to rise by as much as two thirds after consumers reacted well to new products and promotions.

The company says net profit for the 12 months to July 31, will rise from $NZ20.4 million in 2014-15 to between $NZ33 million and $NZ34 million (between $A31.1 million and $32.0 million).

This marks a substantial turnaround for the company, which saw earnings slide 51% in 2014-15 after it going its merchandising wrong and was forced to quit stock by cutting prices and margin.

In that June trading update, net parofit after tax was estimated at $NZ32 to $NZ35 million, so it could end up close to the top of that range. “Product newness and careful management of promotional activity have resulted in a better than expected gross margin,” Kathmandu chief executive Xavier Simonet said in a statement.

"As indicated in our June update, product newness and careful management of promotional activity have resulted in a better than expected gross margin for FY2016.

"Continued realisation of cost efficiencies and improved working capital management has contributed to an improved FY2016 profit outcome and generated strong operating cash flows.”

Sales for the year ended July 31 were $425.5 million up $16.2 million (4.0%) on the previous year. Same store sales were up 1.6% at constant exchange rates.

The news pleased the market and the dual-listed company’s shares jumped 3.5%, to $1.74.

The company fended off a hostile takeover bid from New Zealand retail rival, Briscoe Group.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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