As expected, NZ-based outdoor clothing retailer Kathmandu (KMD) returned to profit growth in 2015-16, lifting net profit 64.2% to $NZ33.5 million ($A32.5 million) after cutting costs and promotional pricing.
The net profit result was in line with the company’s upgraded (as recently as June) $NZ32 million to $NZ35 million full year guidance.
The top of the June update was for a rise of nearly 72%, so its clear that second half growth slowed towards the end of the year.
And with a such as solid recovery from the depressed performance in 2014-15, the group has boosted dividends.
Kathmandu declared a final dividend of NZ 8 cents a share, payable on November 25, taking the full year payout to NZ 11 cents a share compared with NZ 8 cents in 2015.
Topline group sales rose 4% to $NZ425.6 million in the year ended July 31, with Australian sales up 7.4% which was much stronger than the 1.9% growth in New Zealand.
On a same-store basis, sales rose a more subdued 1.6% in constant currency terms, or 0.4% in actually currency, slowing sharply in the second half as Kathmandu sacrificed sales by cutting back on discounting to protect gross margins.
Gross margins recovered 110 basis points to 62.6% but remain below levels four years ago, while costs of doing business fell 260 basis points to 47.4% after job cuts last year.
Mr Simonet was cautious about the year ahead, saying the retail environment remains challenging and competition is increasing.
"We have worked hard to minimise the impact of currency on our gross margins through sourcing negotiations, product newness, and continual refinement of our customer-centric promotional calendar.
“Cost efficiency and improved working capital management have also contributed to a successful 2016,” he said.
However, he signalled a renewed push offshore, saying Kathmandu would explore opportunities to further expand into international markets.
The 2016 result was big improvement on 2015, when net earnings slumped 52% to $NZ20.4 million after Kathmandu was forced to discount prices aggressively clear excess winter stock.
That profit plunge saw New Zealand retailer Briscoe Group to make an opportunistic cash and scrip takeover offer worth about $1.60 a share or $324 million. Kathmandu shares closed at $1.94 on Tuesday.
The bid was ultimately rejected by Kathmandu shareholders, leaving Briscoe sitting on a 19.9% stake.
Online sales were 7% of total sales and are growing at an annual rate of 15%, the company said yesterday.
