Kathmandu (KMD) shares rose a solid 4% yesterday, reversing some of the recent 10% slide after the annual meeting in NZ heard the outdoor equipment and clothing group planned to concentrate much of its investment in Australia in the coming year.
Kathmandu shareholders also heard that sales are on track with last year, but much will depend on Christmas trading.
Overall, the company said sales are slightly ahead in the first quarter, but New Zealand stores posted a “disappointing minus 1.9 per cent revenue, offset by a 4.3 per cent lift in Australian store sales”.
Kathmandu made a tax-paid profit of $33.5 million in the year to July 31, up 64% on the year before.
Simonet said the disappointing local (NZ) store trading so far this year was due to Kathmandu reducing the number of promotions because the high New Zealand dollar had made goods more expensive to import.
He said the company had maintained its working capital, had lower debt, and was on track for a similar financial result to last year, "but obviously it depends very much on Christmas and we have just started our Christmas activity".
Revenue and profit margins were increasing after a period of cost cutting.
This year CEO Xavier Simonet told the meeting that Kathmandu will refurbish and relocate 17 stores, mostly in Australia,.
"I want to say a few words about store network expansion, opening stores is not anymore a focus for us in the sense that the focus is on making sure that the existing stores deliver increased profitability and increased sales, however we will continue to open stores as opportunities arise particularly in Australia where new shopping malls open from time to time and where we need to be where the customer is but more than that we are going to refurbish stores and make sure that we understand the customer and that we invest beyond our existing stores.
“This year we are going to refurbish and relocate 17 stores which is quite a lot and we are going to do minor refurbishments and renovations to another 12 stores so a lot of the capex that we spend is allocated to store refurbishments and in the future is going to be more of a focus for us to make sure that we remain relevant in retail."
And he revealed the company will be looking at changing its wholesale strategy.
"At the moment Kathmandu only has basically an owned retail business and we want to investigate the opportunity to have a proper wholesale opportunity internationally particularly in key markets like Europe and North America.
"We are going to engage with a selected number of key customers in North America and Europe in the next two months and drive partnerships and hopefully be listed in some of them to open up to a new international opportunity.” The shares ended at $1.78 in Australia, up 4%.
