NZ based outdoor wear retailer, Kathmandu lifted first-half profit nearly 14% to $NZ13.95 million ($A13.55 million) despite weak sales over the Christmas period.
The Christchurch-based retailer said yesterday sales rose 13.3% to $NZ232 million for the six months to January 31, belying the negativity around a trading update earlier in the year that revealed the weak trading over Christmas-New Year.
That update in January saw the shares plunge 15% in a day.
The shares eased at the start of trading yesterday, then rose 0.4% and then sold off, falling 9.4% to end at $2.12 with the selling accelerating in afternoon dealings.
That’s still well short of the $2.62 the shares were trading at before the update in early January.
Investors didn’t take kindly to hints of weaker margins in the current second half.
But the net profit from Kathmandu easily beat its downgraded guidance of a maximum 8% increase in profit.
Chief executive Xavier Simonet said in yesterday’s statement he was pleased to see Kathmandu stores’ retail gross margin improve despite lower than expected sales, although the dual-listed retailer warned of a second-half margin dip, with promotions planned in Australia and New Zealand.
“Following strong same-store sales growth at the start of our financial year, Kathmandu experienced softer trading conditions in Australia and New Zealand over the Christmas and Boxing Day period. Despite sales being below expectation, it was pleasing to see an improvement in retail gross margin,” he said in yesterday’s statement.
“We remain focused on achieving sales and profit growth in our core Australasian business to fund investment for future growth,” Mr. Simonet said.
“Our full-year result is still very dependent on the key promotions to come, in which we will be cycling a successful second half last year.”
Kathmandu same-store sales were flat – a 1.2% rise in Australia offsetting a 2.2% fall in New Zealand – while pro forma sales from the Oboz shoe brand acquired last year jumped 38.6%.
Kathmandu declared an unfranked interim dividend of 4.0 NZ cents. That’s unchanged from a year ago and a sign of the board’s caution about the outlook for the second half.
