Kathmandu and Briscoes see gains

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.

- simon.hartley@odt.co.nz

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