Kathmandu owner KMD Brands‘ leadership criticised at annual shareholders’ meeting

KMD Brands is relying on a strong holiday sales period to ensure a positive half-year result.

KMD Brands‘ shareholders voiced their criticism of the board and the company’s direction during its annual shareholders’ meeting today after the company revealed its first trading update for the 2025 financial year.

In the firing line were outgoing chief executive Michael Daly and board chairman David Kirk, who were both up for re-election to KMD Brands’ board of directors.

Some shareholders were particularly critical of Kirk’s leadership of the group over the past 10 years, questioning if Kirk had “any fresh ideas” to take the business forward.

But Kirk, Daly and Abby Foote, who was also up for re-election, all won their prospective votes for another term.

Kirk said he still had a lot to offer in the role, but acknowledged this would be his last term and he would not seek further re-election.

As for the shareholders in attendance, many had questions about the company’s strategy.

One shareholder questioned the board about the retailer’s Kathmandu St Lukes store in Auckland, saying it looked “tired”, “not inviting” and “dark”.

Daly shared his knowledge of the store and affirmed to the shareholders it needed a refresh due to being at the end of its visual cycle.

Michael Daly, outgoing group chief executive of KMD Brands, has won re-election to the board of directors for another term.

Another shareholder questioned the company’s decision to be listed on the ASX and NZX sharemarkets and suggested leaving one, but Kirk was quick to share how detrimental it would be to leave either market.

One inquired into the quality of stock across the brand’s inventories, with Daly acknowledging a surplus of specifically black wetsuits and raincoats, but he was confident they would be able to be sold as inventories reduced.

Another critiqued the brand’s strategy regarding third-party products in stores and argued the company was becoming another wholesaler, but this was met with resistance from Kirk who said the number of third-party products was reducing.

Kirk also challenged the sentiment from one shareholder that Kathmandu competitor Macpac was gaining market share from the business, arguing that Kathmandu was growing quicker.

In a final message to the meeting, incoming chief executive Brent Scrimshaw said he was looking to the future with optimism and working with the leadership of Kathmandu, Rip Curl and Oboz.

He said the company was in the “next phase of opportunity”.

KMD Brands director Brent Scrimshaw will soon take over as group chief executive.

First-quarter result

The annual general meeting was held shortly after KMD Brands gave a trading update.

The group’s Q1 FY25 result anchored on the need for strong Black Friday and Christmas sale periods if the company is to have a positive half-year result.

Total sales for the group from August 24 to October 24 declined by 5.8% year-on-year.

All three brands reported a decline, with Kathmandu’s sales in Q1 declining by 2.7%, Oboz’s by 8.6% and Ripcurl’s by 6.7%.

Daly said the group was remaining cautious about consumer sentiment given the challenging global macroeconomic environment.

“We are encouraged that Kathmandu has continued to show an improving sales trend through the first quarter of the new financial year,” Daly said.

“Brand awareness has improved, and we expect the new campaign will have a positive impact on building key long-term brand associations.”

Direct-to-consumer (DTC) sales for Kathmandu slowed their decline but still remain tough for the brand.

Kathmandu Australia’s total sales for Q1 FY25 were 4.3% higher than last year. However, New Zealand sales decreased by 15.4% due to end-of-line clearance sales.

While total sales for Q1 were down, gross profit dollars for the brand were up 3.6% compared to last year.

As for Rip Curl and Oboz, wholesale accounts remain cautious on their pre-season commitments.

Rip Curl’s wholesale sales decreased by 11.2%, while Oboz’s wholesale sales fell by 8.5% compared with the same time last year.

However, Rip Curl’s DTC sales continued to outperform, with global DTC sales for Q1 FY25 down 3.4% below last year.

Daly reiterated that the company’s strategy for the year ahead remained unchanged.

“For FY25, we remain focused on returning to sales growth, improving profitability, and reducing inventory.”

Shares in KMD Brands were down 1c to 42c this afternoon. The shares are down 37c or 47% over the year.

Tom Raynel is a multimedia business journalist for the Herald, covering small business and retail.