KMD Brands profit plunges 40% despite record sales

Kathmandu Brands posted a record second half after facing significant disruption in the first six months of trading. Photo / Provided

KMD Brands reported net income of $36.8 million, down 40% from a year earlier, but the company met market expectations.

Group sales rose 6.2% to a record $979 million in the year to July 31, but earnings before interest, taxes, depreciation and amortization (Ebitda) fell 16% to $92 million, as planned.

Lower profits were attributed to first-quarter lockdowns and supply chain disruption in Australia.

The company owns and operates Kathmandu, Rip Curl stores and Oboz Footwear wholesale.

KMD will pay a final dividend of 3 cents per share, for a total dividend of 6 cents per share for the year.

The dividend payout of $42.5 million is a record for the company.

The company had a record trading period in the second half, but said ongoing Covid-19 lockdowns and disruptions affected sales in the first half.

Chief Executive and Managing Director Michael Daly said the company was able to deliver strong results despite the impact of the Covid-19 disruptions.

“The brand achieved its highest ever sales result in Australia for the key winter promotion period in the fourth quarter, and its highest ever gross margin result in the second half,” Daly said. in an update to NZX.

Daly said Oboz continued its strong growth and saw record demand during the year, despite supply challenges.

“With the effects of Covid now largely behind us and the return of international travel, we are very focused on executing our growth strategy by expanding our global footprint, investing in digital platforms, leveraging excellence operational and leading the industry through sustainability and innovation.”

He said Rip Curl achieved sales growth across all channels and in major international regions, particularly Europe, Hawaii and Southeast Asia.

“Rip Curl’s wholesale order books remain significantly above pre-Covid levels, allowing us to better manage supply chain disruptions through short-term inventory investment,” said he added.

KMD said it had a strong balance sheet and net debt of $40.1 million.

It said sales growth over the year was driven by Rip Curl and Kathmandu, while its wholesale channel now represented a similar level of sales to its retail store network.

Future prospects

Daly said the strong momentum from the last quarter of FY22 continued into the new fiscal year.

Group sales in August were up more than 44% from the same month a year earlier and were 10% above pre-Covid-19 levels in August 2019.

“As we approach FY23, the group is well capitalized and I am excited about the opportunities ahead as we invest in the long-term expansion of our global brand house and build a truly unique global business based in Australia and New Zealand,” Daly said this morning.

“With the return of international travel and uninterrupted trade, combined with other
Strengthening our Rip Curl, Kathmandu and Oboz brands, KMD Brands is well positioned to deliver continued sales and profit growth. »

Daly said the company’s growth will come from strong wholesale demand for Rip Curl, increased tourism and store footfall, as well as the Kathmandu brand’s planned expansion into Europe and the rest of the world. Canada and a return to normal supply conditions for its Oboz brand.

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