NZ-based outdoor fashion retailer Kathmandu seems headed for one of the better results of the 2019-20 first half reporting season, thanks in part to its purchase of the RipCurl surf business.
A trading update on Friday to the ASX and an investor day presentation southeast of Melbourne saw the retailer’s shares jump more than 17% to $3.54 a fresh six-year high. They touched an intra-day high of $3.59 in trading.
The company told investors its underlying half-year earnings before interest and tax (EBIT) for the 26 weeks up to January 31 would be up 40% boost on the same half last year, largely fuelled by the $350 million purchase of Rip Curl in 2019.
This will see the company’s underlying EBIT, which excludes the one-off acquisition costs, around $NZ27.7 million ($A26.5 million).
Same-store sales for the company’s Kathmandu stores grew 1.5%, a marked improvement on the flat growth recorded in the first half of the 2018-19 financial year. The growth was helped by a 30% jump in online sales for the period.
Rip Curl, which the company acquired in October, grew total sales by 2.7% for the first three months under its new ownership, and same-store direct-to-consumer sales grew 2.6%.
The company’s 118 Australian and New Zealand stores, which account for around one-quarter of Rip Curl’s total revenue, saw same-store sales jump 8.3%, driven by an increase of beach-going Aussies over the hot smokey summer along the East Coast.
Hiking boots brand Oboz also performed strongly for the half for Kathmandu, with sales up 10% for the half.
Kathmandu’s chief executive officer Xavier Simonet said the company had seen a shift in spending away from the Christmas period towards the Black Friday weekend in late November, which contributed to lower than usual foot traffic.
“The Christmas trading period has seen a further shift towards Black Friday and Boxing Day events. Low December market foot traffic between these two events, unusually hot weather, and bush fires in Australia, have combined to moderate first-half sales,” he said.
“We have responded to these challenging Australian conditions by focusing on operational execution, and we are pleased to have achieved same-store sales growth for the first half.”
Mr. Simonet said the company was monitoring the coronavirus outbreak, pointing out that Kathmandu sourced its products from a diverse range of suppliers and had a longer stock turn. Consumer confidence has so far not been affected by the virus, he said.
“[Kathmandu] has mitigation plans in place if there is a prolonged disruption to our Chinese suppliers,” he said.
Kathmandu will release its half-year figures on Monday, March 30.
