Boot Maker Kicks Kathmandu Profit Higher

By Glenn Dyer | More Articles by Glenn Dyer

While Kiwi outdoor apparel retailer Kathmandu seems to have tracked down a vein of Aussie consumers who were ready to spend enough to boost the company’s earnings to record levels in the year to the end of July, the real boost came from the first full year contribution from US boot maker, Oboz.

Kathmandu’s 2018-19 results yesterday made it clear the record performance was in part driven by higher spending across its Australian stores. The level wasn’t as strong as in 2017-18 but compared to what other retailers were reporting, it was solid growth.

Also helping boost returns was the Oboz show business in the US which performed strongly in the year to July with sharp rises in revenue and profits.

And it seems Kathmandu has started 2019-20 with a surge, especially in New Zealand thanks to a late winter.

That’s why the shares were up 7.6% to $2.83 on the ASX yesterday.

Kathmandu reported a net profit after tax of $NZ57.6 million ($A53.3 million), up 13.6% on the year prior and slightly better than the company’s own guidance of $NZ57 million made in August.

A final dividend of 12 NZ cents has been declared (up from 11 NZ cents a share), bringing the full-year payout to 16 NZ cents a share up from 15 cents previously.

For the year ending July 31, overall sales increased 9.7% to $NZ545.6 million, but sales growth on a same-store basis were sluggish, up just 0.6% for the year.

This was due to the weak performance in the company’s 48 New Zealand stores which saw a nasty 3.9% slide same-store sales, which the company partially attributed to low foot traffic and a late start to the key winter trading period.

Kathmandu said its 119 Australian stores continued to grow but have slowed significantly since 2018, with same-store sales growth of 2.7% compared to 7.5% last year.

But the slower growth was better than the 0.3% rise in sales in 2018-19 volume terms (which is the best measure for plotting the strength of retail sales in Australia). In fact, in volume terms, retail sales didn’t grow at all in the six months to June and fell in July.

“Over the past 12 months, the team delivered another record sales and profit result. The key drivers of this growth were a positive contribution from the Australian business, and rapid sales and profit growth from Oboz,” Kathmandu chief executive officer Xavier Simonet said in a statement.

Oboz is the US-based hiking boots business bought last year. It made its maiden full-year contribution to the business, reporting a 30% growth in sales to $US44.6 million ($65 million) and earnings growth of 38.6% to $US7.9 million.

For the first seven weeks of the 2020 financial year, same-store sales grew a healthy 6.1% across the company, with the later winter trading period seeing New Zealand sales jump 11.7%

Mr. Simonet said the company was well-positioned for future growth.

“Our entire team is proud to have delivered four years of innovative products, sustained sales and profit growth, strong operating cash flows and significant value for our shareholders,” he said.

Glenn Dyer

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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