Retailers Kathmandu and Briscoes have delivered positive
financial guidance in market updates showing improving
margins and profit lines.
Kathmandu shares spiked more than 4% to a 13-month high
yesterday of $2.30, after the leisurewear retailer predicted
its first-half profit could be boosted by as much as 75%,
within a band of $9.5 million to $10.5 million.
A high degree of volatility remains in the retail sector,
with competition from increasing imports challenging profit
margins and consumer expectations of large cut-price sales,
but Kathmandu and Briscoes have given guidance of strong
sales during their respective reporting periods.
Kathmandu's result for the half year to January would be
released on March 23, while Briscoes' full-year result to the
end of January was expected to be delivered on March 7, the
pair said in separate market updates yesterday.
Craigs Investment Partners broker, Peter McIntyre, said
Briscoes' Rebel Sport brand had underpinned much of its 3.35%
gain in sales, rising to a total $452.7 million''It's still a
tough retail trading environment out there, but Briscoes have
done well and maintained margins,'' Mr McIntyre said.
Briscoes expected the group's reported full-year tax-paid
profit to exceed $30 million, representing an increase of at
least 9%, compared with last year's $27.53 million.
Kathmandu said its after-tax profit for the half was expected
to be between $9.5 million and $10.5 million, compared with
$6 million for the corresponding period a year ago, on the
back of a 13% rise in sales to $165.8 million.
Forsyth Barr broker Peter Young said Kathmandu did well for
the half year, thanks to strong trading conditions during
December and January.
''Management, however, remains cautious on the full-year
result as up to 60% to 70% of their earnings are made in this
period,'' Mr Young said.
Australian sales continued to outpace New Zealand sales which
highlighted the continuing strength of the Kathmandu brand
and its marketing push in Australia, he said.
''The first-half earnings guidance indicates very strong
growth on a year ago. We've upgraded our forecasts
accordingly,'' Mr Young said.
While the half year was a ''strong result'', Kathmandu's
full-year result was weighted towards its second-half
trading, from which the company expected about 60% of sales
and 70% or more of its earnings, Mr Young said.