The warm autumn and early winter in Australia, plus the downturn in consumer spending triggered by the Federal Budget has captured yet another retailer, with outdoor and adventure wear group Kathmandu (KMD) revealing a significant slide in sales growth and an actual fall in earnings for the 2013-14 financial year.
The company, which is based in New Zealand, told the ASX yesterday that sales through June have been below expectations in both Australia and New Zealand.
And as a result, the company now estimates earnings before interest and tax (EBIT) for the 11 months to the end of June to be between 10% and 15% below its fiscal 2013 year.
The news startled the market, coming as a shock as Kathmandu has built up a reputation for being a well run operator, not prone to surprising the market.
The shares lost 17% in early trading and gradually made up some of the lost ground during the rest of trading, but were still 12% down by the close at $2.92.
KMD 1Y – Kathmandu slips after stellar run
The company joins the likes of Super Retail group, JB Hi Fi, The Reject Shop, RCG Group (The Athletes Foot) and Noni -B in reporting damaged sales growth or lower profits (or losses in the case of Nino B) from a combination of the warm autumn and early winter which have ruined the winter sales season, especially in clothing.
But it’s not just clothing, as sales of automotive products have been hurt at Super Retail, along with outdoor goods, while JB Hi Fi’s sales growth has been impacted since the budget was revealed six weeks ago.
Kathmandu chief executive Peter Halkett said in the statemet the downturn in sales had been particularly felt in the past fortnight, during the start of the company’s winter sale promotion.
“In this period, across all the major metropolitan cities in both countries with the exception of Perth, we have been selling in a period of warmer, drier and generally sunnier weather than last year,” he said.
He said if the normal winter pattern did not return by July then the company anticipated earnings for its 2014 fiscal year to be between 10% and 15% under the EBIT of $63.4 million for the 2013 financial year.
Mr Halkett said there is still a chance of improvement in the remaining five weeks of Kathmandu’s financial year but forecasts for a mild and drier winter across Australasia reduced hopes of a trading recovery in its core winter stock, including jackets, thermals and fleeces.
Kathmandu’s full year result for 2014 will be released to the market on September 22, and an update on the estimate will be provided in early August.
With this warning in mind, don’t be surprised if Myer and David Jones (which balance at the end of July) issue new guidance in the next few weeks.
As well, the likes of Target and Kmart at Wesfarmers and Big W at Woolworths must also be seeing some impact on sales and profits from the warm conditions and the post budget slide in spending and confidence.
