In terms of the current spate of negative news and updates for the Australian retailing sector, outdoor retailer, Kathmandu Holdings surprised the market yesterday (well relative to the likes of grizzling Harvey Norman chairman Gerry Harvey) with the news that same store rates rose in the 16 weeks to November 21 from a year ago.
To get real same store sales growth in the current environment is a pretty good achievement, so it was no wonder Kathmandu shares jumped 7.5%, or 9c, to $1.28 yesterday.
The shares actually opened at an all time low of $1.18 yesterday, but recovered strongly during the day.
Kathmandu shares have fallen 30%, from around $1.68 in early August to yesterday’s lowest point since listing last November.
But as impressive as the rise in same store sales was, the company revealed that same store sales in New Zealand and the UK rose in the 16 weeks, while Australia suffered a "small decrease”.
Nevertheless it was a good overall result, as the market acknowledged.
The company, which listed a year ago, in November 2009, told shareholders at its AGM yesterday that topline sales were up 9.3% at $51.6 million for the period, which it described as ‘challenging’.
The rise in same store sales compared with growth of 19.2% in the previous year when government stimulus spending in Australia and NZ drove retailing sales.
The 2.1% rise in first quarter same store sales compares favourably with the 1.3% rise in the 2010 financial year.
The 16 weeks to November 21 included some of the toughest trading conditions this year, judging by comments from Gerry Harvey, Woolworths, JB Hi Fi, Noni-B and other retailers.
Chief executive Peter Halkett said growth in the product range would continue to be a key growth driver.
"Continuous innovation of new product ranges with a focus on product design, technology and quality will be key to our ongoing success. We have targeted a 30 per cent range growth over the next three years," he said.
He said retail conditions remained challenging in Australia, New Zealand and the UK.
There was no significant variation in same stores sales performance between the countries during the 16 week period.
"Year to date trading performance is reasonable, particularly given the difficult retail conditions," he said.
Mr Halkett said in the statement that, "Assuming there is no further deterioration in trading conditions, Management and the Board believe Kathmandu will continue to grow profitability in the year ahead. It must be noted however that as usual the first half-year profit result will be largely dependent on the Christmas and January trading period".
He said this year’s store rollout and refurbishment program was on track, and Kathmandu was accelerating the roll out of new ranges, supported by product and category innovation.
Chairman James Strong said the company anticipated continuing to adopt a dividend payout ratio of around 55% of tax paid profit in the medium term.
The economic environment would continue to adversely affect overall consumer spending in at least the short term.
"Despite these circumstances and the disappointing current share price, Kathmandu’s continuing market leadership, brand positioning and value proposition, which is underpinned by its vertical integrated business model, will continue to provide strategic competitive advantage and resilience to deal with any extended market downturn," he said.
