Shares in outdoor clothing retailer Kathmandu (KMD) took a pounding yesterday after the company again surprised with a downgrade.
Kathmandu shares sold off on December 22, falling more than 21% (to $2.07) after a warning about weakening sales was first given, but yesterday’s surprisingly bad downgrade saw them slump more than 27% to $1.355, the lowest they have been for two and a half years.
What stunned analysts and investors was the forecast of a first half loss thanks to weak sales in Christmas and January, according to yesterday’s statement to exchanges on both sides of the Tasman.
Kathmandu warned it would report a net loss of between $NZ1 million and $NZ2 million ($A940,000-$A1.87 million) for the six months to January 25, down from $NZ11.4 million profit the same time last year.
Kathmandu said that while it lifted sales by 6.9% to $NZ179 million during the half (which was weaker than expected), same stores sales fell in Australia during December and January and were down in New Zealand in the weeks after Boxing Day.
The company blamed the result on disappointing sales of summer clothes and reduced demand for cold weather apparel in New Zealand due to warmer and drier weather after Christmas, as well as heavy price discounting to clear excess stock.
KMD 1Y – Kathmandu tumbles on profit slump
Kathmandu has not provided full year earnings guidance and acting chief executive Mark Todd said in yesterday’s statement the company traditionally earned most of its profit during the second half, which includes the winter months.
“Successful execution of our key sales promotions in Easter and winter are core to our overall earnings performance for the full year,” he said in yesterday’s statement.
“June and July, the last two months of the financial year, are the company’s most significant and historically most profitable trading period, and it is too early to assess a potential outcome from trading at that time,” the company said.
The company will release its first half profit on March 24.
