NZ-based outdoor wear retailer Kathmandu (KMD) has confirmed it’s hauled itself back onto the profit track after losing its way last year.
The retailer yesterday declared an unfranked and unchanged interim dividend of 3 NZ cents a share, after revealing a better than expected profit for the January half year of $NZ9.4 million.
The net profit compared with a loss of $NZ1.8 million ($A1.75 million) in the January 2015 half year, when the retailer struggled to clear excess winter inventory and battled lacklustre sales in Australia and New Zealand.
Since then management has changed and the company has revamped its line up and abandoned discounting, improving profit margins.
Sales in the latest six months rose 9% to $NZ195.9 million and same-store sales rose 3.8% on a constant currency basis – up 4.3% in Australia and 3.1% in New Zealand.
Underlying net profit result was at the top end of the company’s guidance of $NZ8.5 million to $NZ9.5 million and beat market forecasts around $NZ8.9 million.
Kathmandu, which fought off a hostile $324 million, $NZ1.80 a share takeover offer from rival Kiwi retailer Briscoe Group last year, upgraded first-half profit forecasts in February following an improved trading performance over Christmas and January. Yesterday it met those upgrades.
And CEO Xavier Simonet reaffirmed the retailer’s guidance for full-year net profit of $NZ30.2 million, but as usual that forecast is dependent on the usual caveats of how the company trades in the six months to June 31, and how cold the winter is in NZ and Southern and Eastern Australia.
KMD 1Y – Kathmandu back in the black
One negative for this half year is the unwinding of currency hedges against the stronger US dollar which end, meaning the company faces higher US dollar costs for imported goods.
Mr Simonet joined Kathmandu last July, and since then he has closed unprofitable stores, cut head office staff numbers by 10%, and reduced the number of clearance sales to boost gross margins.
That was reflected in the improved margins in the latest half year – they rose 3.50 percentage points to 62.8% as Kathmandu sold more stock at full price.
The improvement was helped by a 3.8 percentage point fall in operating costs to 51.7% of sales. That saw earnings before interest and tax bounce to $NZ15.1 million, from a loss of $NZ0.6 million a year ago.
Kathmandu said its online sales were up 23% in the half year and now account for 6.6% of total sales.
Briscoe Group still has a 20% stake in Kathmandu and has not ruled out making another offer.
Kathmandu shares ended flat on $1.50.
