Kathmandu slips under forecast profit, shares slumps 9.8pc

Photo / Richard Robinson

Kathmandu Holdings, the outdoor and lifestyles retailer, announced a July-year result that saw same store sales slightly down on expectations, but with earnings before interest and tax exceeding last year's.

The outdoor travel and adventures store manager listed on the New Zealand and Australian stock exchanges last November, and announced that its consolidated sales for the year were $245.5 million, up almost $30 million or 13.9 per cent on the previous year.

Gross margins fell short of last year's forecast at 63 per cent, which is below both the 64.4 per cent result in the previous year and 64 per cent prospectus figure. Investors displayed their displeasure, with the stock tumbling 9.8 per cent to $1.85 when the NZX opened.

"Throughout the final four months of the financial year, in all three countries that Kathmandu trades in, the retail environment has been very challenging, and more difficult than we experienced in the first half of the year," said chief executive officer Peter Halkett. "Given the retail market conditions and a clear downturn in consumer spending, we believe the level of promotional activity and our pricing strategies have been the right response for our business."

Compared to the previous year, Australian sales were up A$14.1 million to A$113.3 million, New Zealand sales lifted $9 million to $94.1 million, and the United Kingdom sales gained 0.7 million pounds to 4.3 million pounds.

Halkett said EBIT profit for the year is expected to be between NZ$47 - $48 million, which while 7-9 per cent up on the previous year's EBIT result is still 5-7 per cent below the prospectus forecast.

Kathmandu has opened 14 permanent new stores in the year; four in New Zealand and 10 in Australia. The increased sales derived from the larger than forecast number of new stores, originally forecast as 12, and the operation of three short fixed term lease site stores in the second half year, both contributed to sale performance exceeding the forecast in absolute terms, Halkett said.

With growing participation rates in outdoor travel and adventure activities, "management remain optimistic that Kathmandu's business model and growth strategies will continue to deliver strong earnings growth, and attractive margins over the medium term," he said.