While last year’s result represented turning a corner, this year’s could be a true turnaround of fortunes.
Craigs Investment Partners broker Peter McIntyre said the ‘‘key metric’’ for the outdoors group was that it had improved its profit margins "quite significantly".
"Product placement seems a lot better, and maybe they’re reading the weather better," Mr McIntyre said.
In previous years mild winters, high stock inventories, lacklustre sales and the slashing of profit margins to move old stock also prompted downgrades and year-on-year declines.
Kathmandu’s poor performance in recent years and flagging share price last year resulted in Briscoe Group making an ultimately unsuccessful hostile takeover bid of $362million.
Kathmandu issued legal proceedings in June seeking the outstanding balance of $2.5million, claiming it as part of the expenses it incurred during the attempted takeover.
Yesterday, Kathmandu chief executive Xavier Simonet said he expected to report a better-than-expected gross margin for the company’s full-year result to July, due to be released on September 21.
"The sales pattern during our winter campaign changed this year with sales happening earlier in the campaign at a higher gross margin," he said.
Kathmandu shares were up almost 6% at $1.83 yesterday, and up 7.3% on a year ago.
Shares reached a high of $4 in May 2014, but since early 2015 had been trading between $1.75 and about $1.30.
Mr Simonet said full-year revenue was expected to be up $16.2million, or 4%, at $425.5million and same-store sales were up 1.6%, at constant exchange rates.
Last year’s earnings before interest and tax of $33.2million were expected to increase to $50million-$51million, and after-tax profit of $20.4million was set to rise to $33million-$34million.
Almost 18 months ago, in reaction to Kathmandu’s then shock profit warning, more than $100million was wiped from its market capitalisation and its share price halved from a year earlier.
It had warned at the time its previous $11million half-year profit could plunge to a loss of up to $2million.
Mr McIntyre’s update yesterday backed up positive guidance released in June.
"They’ve come in at the very top end of guidance. The share price [yesterday] is up because they have delivered on those expectations," he said.
Also, consumers were more confident at present, rising house prices flowing through into retailing, Mr McIntyre said.
Mr Simonet said "product newness" and careful management of promotional activity were behind the improved gross margin for the year.
Cost efficiencies and improved working capital management contributed to the better profit outcome, generating strong operating cash flows, he said.
Mr McIntyre said while there was strong competition from other retailers in the outdoors sector, he expected Kathmandu could continue building on its recent successes in the year ahead.
Mr Simonet had cautioned in early February that the full-year profit result remained dependent on successful second-half trading, when about 55% of sales were made and between about 65% and 70% of earnings.
