Kathmandu's Dunedin store; which along with the company's 139 outlets around the world will be ramping up for crucial Easter and winter sales. Photo by Linda Robertson.
Growth in Australian outlets for leisure and sporting goods
retailer Kathmandu spearheaded a strong first-half
performance, with Australian sales and after-tax profit
coming in higher than guidance.
While Kathmandu is targeting profit growth for its full-year,
that is with a cautionary ''on a constant currency basis'',
given many analysts are picking parity between the New
Zealand and Australian dollars, plus, a backdrop of rising
Kathmandu's revenue grew 1% to $167.6 million, and sales for
the six months to January were up 14.8% in Australia and in
New Zealand 5.6%, while the United Kingdom shops declined
from six to four and booked a 33% sales decline.
Group sales overall were up 1%, or $1.7 million, to $167.6
Earnings before interest and tax (Ebit) were up 11.4% from
$15.8 million to $17.6 million and after-tax profit up 10.7%,
from $10.3 million to $11.4 million, on the same period a
Kathmandu chief executive Peter Halkett said the first-half
result was achieved by continuing strong same-store sales
growth, particularly in Australia, combined with improved
gross margins and effective management of costs.
''Our focus in the second half of the year will continue to
be growing same-store and online sales,'' he said.
The full-year result would continue to be underpinned by
sales growth in the Australian market, but he said the
Australian stores opening in full-year 2014 were generally
lower turnover stores than those which opened in full-year
''As a result, the profit contribution from new stores will
reduce in full-year 2014,'' he said.
He described the New Zealand economic environment and
consumer sentiment, as ''currently generally positive'', but
there was ''more uncertainty'' in Australia's prospects.
''I anticipate it will continue to be the more challenging
retail market during 2014,'' Mr Halkett said.
Craigs Investment Partners broker Peter McIntyre said it was
a ''strong result'' from Kathmandu, but noted the strength of
the kiwi against the Australian dollar stripped about $2.2
million, or 11%, in lost foreign exchange from its Ebit line.
''They're expecting to be up on profit for the full-year, but
there are a lot of currency headwinds out there, especially
with so many [analysts and economists] picking parity with
the Aussie,'' he said.
In early February Kathmandu shares spiked more than 4% to a
13-month high 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.
At the time, 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.
Mr McIntyre said net store openings for the period were
three, running below his expectations, but Kathmandu had
maintained its target for 15 new stores during full-year 2014
and had upgraded its target for Australian and New Zealand
stores from 170 to 180.
He said the retail sub-sector of sporting goods and apparel,
where Kathmandu and Rebel Sport sat, were doing better than
the wider retail arena, where the clothing and shoe brands
were struggling, such as results released by Hallenstein
Forsyth Barr broker Peter Young said Kathmandu was a ''strong
operator'' and in the near-term result forecasts were being
driven by Australia, plus market share gains, but noted the
high kiwi would offset some gains.
He noted there was no full-year guidance provided yesterday
by Kathmandu, given the significant influence of Easter and
''The outdoor category continues to outperform apparel and
has been relatively resilient to the tough Australasian
retail backdrop,'' Mr Young said.
While the New Zealand result was largely in line with
expectations, in Australia the strong same-store sales growth
and margin expansion gained, despite a tough economic
background, suggested Kathmandu had gained market share
during the period.
On the potential full-year result, Mr Halkett said Kathmandu
had only just started its Easter sale, the second of its
three largest promotional events each year, so it is still
too early to assess what the overall result for the full year
He noted unseasonal weather through the Easter and winter
sale periods was always a significant variable influencing
the full year's result.
During six months to January. -
• Australia, 81 outlets increase to 90 - 61.4% of sales
• NZ, 42 outlets increase to 45 - 37.2% of sales