Halkett said the existing store had been successful for many years but its location lacked profile and it didn't have the floor space required to display Kathmandu's full product range.
"We've chosen Newmarket for the location of what you would typically call a flagship store," he said. "[Newmarket] is a prime market for us with the type of customers that live and shop in that area."
Halkett said it was important to note that while the store was very large, most of the floor space was on the upper level.
"The [rent] you pay for that space upstairs is a lot less than what you pay for down at ground level so it makes it a little more affordable."
Kathmandu said its original Newmarket site would remain open and operate as an outlet store.
The new store will employ 19 staff.
Kathmandu released its interim result last week, revealing a 42 per cent slump in net profit to $6 million.
Increased promotion and a 27.1 per cent rise in operating costs, which were partly related to delays in new store openings, affected the result.
The company said the increase in operating expenses was about $4 million above budget, although $2 million of the costs were non-recurring.
But despite a difficult retail environment on both sides of the Tasman, Kathmandu increased same-store sales by 8 per cent during thesix months to January 31, while total sales rose 15.4 per cent to $146.7million.
The company conducts most of its business during the second half, when its crucial Easter and winter sales take place.
"We had some one-off costs [in the first half], but the underlying trend is very, very positive," Halkett said yesterday.
Kathmandu operates 40 stores in New Zealand, with a further 70 in Australia and six in Britain.
Shares in Kathmandu were steady at $1.60 last night.
