Kathmandu sales rise 9.3pc in 'challenging' markets

Photo / Richard Robinson

Kathmandu, the outdoor equipment and clothing chain, lifted sales in the first 16 weeks of the year by 9.3 per cent and predicted earnings growth in 2011.

Sales rose to $51.6 million in the 16 weeks ended November 21, or 2.1 per cent on a same-store basis, down from growth of 19 per cent a year earlier, chief executive Peter Halkett told shareholders at their annual meeting today.

"Assuming there is no further deterioration in trading conditions, management and the board believe Kathmandu will continue to grow profitably in the year ahead," Halkett said. First-half results will depend on the crucial Christmas/January sales period.

Kathmandu recorded a small increase in same-store sales in New Zealand and the UK. Sales weakened in Australia, its biggest market with 55 stores compared to 36 outlets in New Zealand and six in the U.K.

Shares of dual-listed Kathmandu rose 3.4 per cent to A$1.23 on the ASX today and have declined 26 per cent this year. They sold at A$1.70 in the 2009 IPO that allowed Goldman Sachs JBWere and Quadrant Private Equity to exit their entire holding.

For 2011, the retailer will focus on its store rollout and refurbishment programme, expanding its product range and maintaining gross margins at 62 per cent to 64 per cent.

Halkett said the company commissioned research into its brand name in the latest year, which is the retailer's "greatest asset." The results will be incorporated into its 'brand refresh' strategy.

The Kathmandu chain was built up by former owner and founder Jan Cameron.

Halkett said there is "much uncertainty and volatility" in the economic and retail environment, with discretionary spending under pressure."

In the year ended July 31, earnings before interest and tax of $47.5 million missed its prospectus forecast of $50.6 million.