Kathmandu owner KMD Brands posts $20m half-year loss but says sales have picked up

KMD Brands has posted a $20 million loss after its 2025 half-year result. Photo / Supplied

KMD Brands, parent of Kathmandu, Rip Curl and Oboz, has posted a $20 million half-year loss despite growing sales year-on-year, a result the company puts down to struggling consumer confidence and wholesale channels.

However, the company believes the momentum is building, with Kathmandu’s sales continuing to improve in each of the last five quarters, with the trend back in the black.

In the six months ended January 31, 2025, the group reported total sales of $470.9m, up 0.5% year-on-year compared to $468.6m in the first half of the 2024 financial year.

Australia was the only region to achieve positive sales growth in the first half.

The group’s underlying earnings before interest, tax and depreciation fell by 74.3% from $15.1m in the first half of 2024 to $3.9m.

Overall, the group reported a statutory net loss of $20.1m for the first half.

Outgoing KMD Brands chief executive Michael Daly said direct-to-consumer sales have improved for all three of its brands looking forward.

“We’ve had quite a few different retailers come out who’ve been around for a very long time, longer than I have, and say how challenging it’s been and some of the hardest conditions they’ve seen in a long time,” Daly said.

“From that point of view, it has been challenging, but it is good to see that momentum building back. Our focus has been on building that sales momentum, and we can still be better.”

Michael Daly, group chief executive and managing director, KMD Brands. Photo / Supplied

Looking at the brands, Kathmandu’s total sales grew by 3% for the half to $156.8m, improving from a 2.7% decline during the first quarter to a 6.9% increase during the second.

New Zealand sales were down 2% for the half despite sales growth during the Christmas trading period.

Excluding the clearance of end-of-line products in August last year, sales growth in New Zealand was up 4.8% year-on-year for the remaining five months of the half.

Rip Curl’s total sales grew by 0.1% year-on-year in the first half of 2025 to $278.5m, improving from a 6.7% decline during the first quarter to growth of 6.5% during the second.

Wholesale sales were down by 7.9%, as wholesale accounts remain cautious on pre-season commitments in a challenging market, with North America’s competitive landscape significantly changing.

Oboz was the only brand for which sales declined, falling by 6.3% year-on-year for the first half to $35.6m, with wholesale sales down by 10.6%.

Ongoing pressures

Reflecting wider pressures on the retail industry, the group’s gross margin was down by 0.3% of sales to 58.5%.

Daly said it remains a “very promotional market” and the group can’t be blind to its competitors.

“We’re well aware of that, and obviously we saw some margin pressure for Kathmandu in the first half. We think that will certainly continue in the second half, and it’ll just depend how the winter trades as to how strong that is.

“Any forecast is just hard to say, but certainly along the lines with most other retailers, margin pressure is something that we can see in our short-term pressure.”

Across the group, a net of four stores have closed, with Daly explaining there are a number of cost-of-doing-business initiatives aimed at driving efficiency, particularly regarding its IT spend.

Online sales appear to be a highlight in the result, with all three brands achieving double-digit sales growth compared to the same time last year, with Rip Curl up 13.9%, Kathmandu up 26.6% and Oboz up 32.8%.

The company is planning to launch a new digital platform and new in-store concept in 2025.

In direct-to-consumer sales (including online) for the first seven weeks to March 16, 2025, Kathmandu grew sales by 5.2% compared to last year, even with the impacts to the Australian market of Tropical Cyclone Alfred.

However, gross margin is under pressure due to increased promotional intensity in a competitive trading environment.

Rip Curl’s global direct-to-consumer sales for owned stores and websites were up by approximately 0.7% year-on-year, with gross margins remaining resilient.

US tariff impact

Daly didn’t expect much impact regarding tariffs from the United States administration but said there was a potential for Rip Curl’s US operation to be affected, with roughly 5% of its products sourced from China.

“If we did nothing, the impact would be somewhere between half a million to a million, but of course, if we get tariffs, we will either pass it back or work with our suppliers to reduce costs or move the production to other parts where there are no tariffs.”

As his last result as chief executive of KMD Brands before the incoming Brent Scrimshaw takes over in just a few weeks' time, Daly reflected on his time in charge and his highlight.

“Yeah, look, I’ve been with KMD Brands for four to five years, but with Rip Curl for like 23 years now.

“Obviously, the acquisition of Rip Curl by Kathmandu. Rip Curl continuing to trade well and become the biggest brand in the group, I suspect, is what I’m most happy about given that I came from the Rip Curl side of the business. But certainly over the course of my five years with KMD Brands and 20+ years with Rip Curl, I’m certainly very happy with the performance of all them.”

No interim dividend was declared after the result.

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