KMD Brands’ first-half trading update revealed stronger-than-anticipated sales and improving margin trends, according to RBC Capital Markets analyst Jackie Moody. However, Moody cautioned that earnings risk remains skewed to the downside, as guidance sits below consensus. KMD Brands is a global company with a portfolio of brands, including Kathmandu, Rip Curl, and Oboz. They design, market, and sell clothing, footwear, and equipment for surfing, outdoor, and adventure activities.
Moody noted that revenue growth of 7.9 per cent to date surpassed market expectations of approximately 4.8 per cent. Additionally, gross margin contraction eased to around 100 basis points year-on-year, exceeding consensus forecasts. This positive sales momentum indicates strong consumer demand across the company’s key brands.
However, like-for-like sales growth decelerated across Rip Curl and Kathmandu. Moody also pointed out that consensus expectations were already at the upper end of the company’s NZ$8 million to NZ$11 million earnings before interest, taxes, depreciation, and amortisation guidance range. This suggests that operating costs may be tracking higher than initially expected, potentially impacting overall profitability.
Shares in KMD Brands experienced a decline of 2.1 per cent in morning trade on Monday, reflecting investor caution amid the mixed signals from the trading update. The market is closely watching how the company manages its operating costs to achieve its earnings targets.
