Outdoor retailer Kathmandu and pharmacy group Sigma have both given us early hints of the damage the lockdowns since June have done to some retailers.
For Kathmandu, while group sales rose because of the strong performance from its surf wear chain, Rip Curl, Kathmandu itself saw sales plummet 17% for the year to $NZ354 million and earnings nearly halved to $NZ26.3 million.
The culprit was the pandemic and associated lockdowns through much of 2021 which hit the core Kathmandu chain hardest of all.
Those lockdowns have continued to batter the business since the July 31 balance date, with Kathmandu sales down 19.9% and Rip Curl sales down 12.8% in the six weeks to September 12.
Supply chain issues are also hurting the company, restricting the retailer’s stock levels, with reduced factory capacity and freight congestion leading to delays and increased costs.
Due to this, the company warned it expects its first half profit for fiscal 2022 to be below the prior half.
Kathmandu shares fell 1.4% to $A1.41.
The warning and sales slide because of the lockdowns in NSW, Victoria and the ACT in the early weeks of 2021-22 is in direct contrast to the way Rip Curl bolstered Kathmandu’s full-year results performance, with the Victorian-based business driving almost all of the company’s growth for the 2020-21 financial year.
Sales across the group, which includes Rip Curl, Kathmandu and footwear brand Oboz, rose 15.1% to $NZ922.8 million ($A890 million) for the July 31 year, with earnings before interest and tax jumping nearly 50% to $NZ92.2 million.
As a result of the improvement, the company will pay a financial dividend of 3 NZ cents a share. With the 2 cents a share interim, the full year payout of 5 cents a share was the first full year payout since 2018-19.
And that was all due to the contribution from Rip Curl which can’t be underestimated as it turned a rotten result from the Kathmandu chain into a strong group outcome.
The surfwear group reported a full 12-month sales contribution (Rip Curl was acquired in late 2019) of $NZ490 million in sales and $NZ56.9 in earnings, the latter of which was up a massive 125% on the prior year.
Kathmandu itself saw sales slump however, down 17% to $NZ354 million and earnings nearly halved to $NZ26.3 million.
Now thanks to the widespread lockdowns in two of Australasia’s biggest markets (and the smaller lockdown in Auckland), it would seem Kathmandu is looking to get hammered this half, but looking for a strong rebound in the second half.
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Pharmacy operator and drug distributor Sigma Healthcare has blamed the impact of the pandemic and associated lockdowns for the half-year net loss of $1.3 million.
And it sees the lockdowns causing more pain in coming months.
Revenues were up 5.5% to $1.7 billion for the July half year and the loss figure was better than the $4.3 million loss during the same period last year when the company had to withstand the first round of lockdowns.
Sigma shares dipped 2.4% to 61.5 cents at Tuesday’s close.
About to retire CEO, Mark Hooper said in the earnings release that the business had achieved a pleasing result despite the continued impact of city-wide lockdowns, which have moved foot traffic away from pharmacies in key areas like airports and CBD areas.
“It is creating a slightly softer position for us,” he said. Despite this, Hooper said he does not expect any widespread closures of pharmacies in city areas, optimistic that the vaccine rollout is now underway.
He said it was disappointing that pharmacies had only been green-lit to give COVID-19 vaccines over the past month, but was confident the sector would now play a big part in speeding up the rollout.
“With Moderna now coming into pharmacies, it’s a real positive,” he said.
Underlying earnings before interest and tax rose 14.7% to $39.2 million for the half but Mr Hooper said the lockdowns will trim that growth for the full year to around 5%.
That’s a more than halving in the solid first half earnings momentum and a sign the damage Covid is doing, even though many pharmacies are front line now in the vaccination race.
Sigma will pay a fully-franked dividend of 1 cent a share, payable October 10. That’s the same as the interim paid last year and the final for 2019-20.
