Kathmandu Rises Above Retail Malaise
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NZ-based outdoor wear retailer, Kathmandu has shown up the likes of Premier Investments, Speciality Fashion and Myer in lifting earnings and sales (especially comparable or same store sales in Australia) in the year to July.
The Christchurch-headquartered company yesterday confirmed earlier guidance for an improved 2016-17 performance. Investors loved the result, sending the shares up more than 7% to $A2.10, confirming the rightness of the board’s decision to reject the $NZ1.80 ($A1.62) a share bid back in 2015 from Briscoe’s, a rival NZ retailer.
In the bid defence, independent experts valued Kathmandu in a range of the $NZ2.10 to $NZ2.41 valuation. The shares closed at $NZ2.27 on the NZX yesterday, up more than 7%.
Clearly those shareholders who rejected the Briscoe’s offer have done the right thing, and will also get an 18% lift in annual dividend as well, something they would not have received from Briscoe’s.
Net profit lifted 13.5% to $NZ38.04 million in the latest year, while earnings before interest and tax (EBIT) for the 12 months ending July rose 12% to $NZ57 million, which was at the top end of guidance.
That was on a lift same-store sales in Australia (its major market) of 6.9% for the year and 3.6% in New Zealand, as annual sales rose 4.6% to $NZ445.3 million.
The result was in line with Kathmandu’s August guidance update, when the retailer forecast a higher than expected profit between $NZ37.4 million and $NZ38 million.
CEO Xavier Simonet attributed the improved result to self-help measures such as innovative new products, including multi-functional rain jackets, improved execution of promotions, better marketing and cost control.
He said the company has also improved its execution of promotions after being forced to discount heavily in 2015 to clear excess winter stock, which led to a 50 per cent plunge in profits.
Mr Simonet is also hoping to boost sales by exploring new channels, including selling Kathmandu products on a wholesale basis to overseas department stores.
“In the year ahead, we aim to continue to grow in our core markets, with gross margin and operating efficiency a key management focus,” he said in yesterday’s statement.
He said the company had low debt and low inventory was well placed to grow in the coming year
Kathmandu increased its final dividend to 9 cents a share, taking the full year payout to 13 NZ cents a share, 18.2% higher than the previous year.
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.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.