KMD Brands (ASX:KMD) has reported a net loss of $20.7m for the half-year ended 31 January 2025, citing cautious wholesale markets and intensified promotional activity across its brands Rip Curl, Kathmandu, and Oboz.
Revenue for the group rose 0.5% to $470.9m, supported by stronger direct-to-consumer (DTC) performance, particularly online, where all three brands posted double-digit sales growth year-on-year.
Despite the revenue lift, underlying EBITDA fell 74.3% to $3.9m, and underlying NPAT came in at a $16.1m loss. No interim dividend was declared.
Operating expenses rose 4.2% to $271.6m, with Kathmandu incurring around $3m in additional spend to refresh brand advertising and support product innovation. Gross margin declined slightly to 58.5%, with clearance activity and competitive discounting affecting both Kathmandu and Oboz.
Rip Curl, the largest contributor to group revenue, posted flat sales of $278.5m, with wholesale revenue falling 7.9% amid global caution. DTC sales grew 4.1% and online sales jumped 13.9% to $21.1m. EBITDA fell 14% to $23.6m.
Kathmandu recorded a 3% lift in sales to $156.8m, recovering in Q2 after a weak first quarter. Online sales surged 26.6%, but EBITDA slid to a $12.8m loss, reflecting the higher marketing spend and margin pressure from promotions.
Oboz, which operates primarily through wholesale, saw sales fall 6.3% to $35.6m. Online sales rose 32.8%, but EBITDA declined to a $2.2m loss due to inventory clearance and margin pressure.
Net debt fell $20m to $76.2m, and net working capital declined by $33.6m year-on-year, aided by reduced inventory levels. The company reported funding headroom of $215m.
Commenting on the results, incoming CEO Brent Scrimshaw said the focus remains on growing sales, restoring profitability, and reducing inventory. He also noted leadership changes, including the appointment of Ashley Reade as Rip Curl CEO and an ongoing search for a new Group CFO.
Shares are trading 4.48% lower at 32 cents.
