NZ-based outdoors retailer Kathmandu has returned to paying dividends after reporting higher sales and profits in the first half.
Helping the improvement and the return to dividends was more than $20 million in government grants and wage subsidies – particularly in Australia and NZ.
In the statement to the stock exchanges, the company had nothing to say whether these payments would be refunded now that sales and profits had recovered – other retailers such as Super Retail Group have refunded their payments.
Kathmandu chairman, David Kirk made it clear it would not be repaying the assistance payments.
“A repayment of JobKeeper at this point would be a transfer from shareholders’ funds to the government, and we feel a balance has been hit,” he told a briefing after the results release.
Mr Kirk said the retailer had also chosen to not repay the subsidies due to many of the company’s staff not receiving bonuses over the last year, and said the company had only “marginally” returned to profit growth during the half.
But companies like Premier Investments, Eagers Automotive and Harvey Norman have refused to repay JobKeeper and have kept their payments, despite reporting record sales, profits and prospects of more to come this year.
Regardless of that stance, investors cheered the result, sending the shares up more than 9% to $1.24
Kathmandu revealed on Tuesday its total sales across the business had risen 12.9% to $NZ410.7 million ($380.1 million) in the six months to the end of January and underlying net profit after tax had leapt 32.8% to $21.3 million.
Profit on a statutory basis, which includes the costs recognised in 2019 for the acquisition of Rip Curl, nearly tripled.
Growth was driven by Rip Curl, which reported a 173.9% jump in earnings and a near doubling of sales as its trade was affected less by COVID than Kathmandu, which saw sales fall 34% over the half as stores struggled through lockdowns in Melbourne and Auckland.
Kathmandu had pointed to this sales difference in a trading update late last year.
Kathmandu will pay a dividend to patient shareholders for the first time in two years, declaring a 2 cent a share interim, down from two years ago.
Companies have been under increasing pressure recently to repay their JobKeeper receipts if they grew their profits over the half-year, with corporates such as Eagers Automotive and Harvey Norman copping flak from shareholders and politicians.
Kathmandu CEO Xavier Simonet saying the strong results were thanks to the company’s $350 million acquisition of Rip Curl in 2019.
“Despite operating in challenging conditions over the first half due to the substantial impacts from COVID-19, Rip Curl delivered an outstanding first-half result, validating the Group’s diversification strategy,” he said.
“Kathmandu was particularly impacted by COVID-19 related travel restrictions, with reduced demand for insulation and rainwear resulting from a lack of international travellers to the Northern Hemisphere.”
Looking to the rest of the year the CEO (who is stepping down shortly) said “our long-term strategy remains unchanged. During the second half we are focused on the strong execution of Kathmandu’s winter season in Australasia.
“We will also see the benefits from synergies and cost-out initiatives across the Group, which we expect to deliver around $15 million of annual savings in FY21.”
“We have a number of key initiatives planned for the second half to further connect with our customers to drive increased sales. We will begin implementing a loyalty program at Rip Curl, and Oboz is launching a direct-to-consumer online store. Kathmandu continues to invest in personalisation and data analytics capability, all with the aim of driving best in class customer interactions.”
“Our brands remain well positioned to capitalise on consumer trends that have seen increased participation in surfing, camping and hiking.
“Kathmandu enters the traditionally strong winter season well prepared. Oboz investment in new product sees it enter the second half with an order book well above pre-COVID-19 levels.
“Rip Curl continues to trade in line with the strong first half trends, and wholesale order books are above pre-COVID-19 levels,” he said.
