Kathmandu profit boosted by Australia

Retailer Kathmandu is looking to Europe and the United States for sales growth. Photo: Linda Robertson
Retailer Kathmandu is looking to Europe and the United States for sales growth. Photo: Linda Robertson
Retailer Kathmandu yesterday reported a profit in line with expectations, helped by a strong result in Australia, Forsyth Barr broker Suzanne Kinnaird said.

Kathmandu reported an operating profit of $315.5million for the year ended July 31, up 14.2% on the $276.2million reported in the previous corresponding period.

Xavier Simonet
Xavier Simonet
Revenue rose nearly 12% to $497.4million from $445.3million and the gross margin rose to 63.4% from 62% in the period under review.

Earnings before interest and tax were up 31% to $74.6million and the normalise profit was $50.5million, up 33% on the $38million reported in the pcp.

Ms Kinnaird said the result was underpinned by a ''very strong'' result in Australia. Same store sales grew 7.5% and ebit was up 54.5% to $A47.6million ($NZ51.8million).

New Zealand sales recovered in the second half of the year but the full-year result was still weak.Same store sales were down 2.4% and ebit down 1.7% to $38.98million.

Suzanne Kinnaird.
Suzanne Kinnaird.
''Kathmandu has not made any post-result trading comments or provided any guidance for 2019, at this stage. The business remains very well positioned in terms of a well managed and performing core Australian and New Zealand business. Momentum is building in its international business.''

Kathmandu chief executive Xavier Simonet said the company's two brands offered ''significant growth potential'' as the outdoor equipment chain sought to crack the American and European markets

The company bought United States footwear supplier Oboz Footwear for up to $US75million ($NZ114million) earlier this year as part of a two-pronged strategy to accelerate expansion overseas.

Kathmandu derives just 4.1% of its revenue outside New Zealand and Australia.

The Oboz acquisition was part of a wider strategy to turn what had been primarily an Australasian retailer into a global outdoor apparel and equipment brand, he said.

Kathmandu was targeting existing Oboz customers in the US for its namesake brand, leaning on New Zealand's international reputation for having a pristine environment and as an adventure travel destination.

''It's an exciting time for the business as we welcome Oboz to the group and accelerate our international growth.

''In Kathmandu and Oboz, we have two great brands with significant growth potential in North America and Europe.''

Kathmandu had spent the past couple of years improving the profitability from its New Zealand and Australian operations by reducing discount sales and taking a more rigorous approach to managing inventory.

That had been largely successful and the retailer had generated its third year of earnings growth under Mr Simonet's leadership.

The board declared a final dividend of 11c per share.

The total dividend was 15cps, a 15% increase on the pcp.

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