Kathmandu profits plummet

kathmanduKathmandu has managed to raise sales by seven per cent for the first half of FY15, amid a period of management upheaval.

Sales for the outdoor retailer came in at $179.4 million, however, gross margin fell from 63.9 per cent to 59.3 per cent.

Despite the rise in sales, EBIT decreased to $0.6 million from $17.6 million in the first half of FY14. Net profit after tax, was also lackluster, with a loss of $1.8 million from a profit of $11.4 million.

Acting CEO, Mark Todd, said the disappointing result was foreshadowed last month.

A contributing factor was aggressive quitting of excess stock in August and September, which drove top line sales at significantly reduced gross margins. This brought forward some customer purchases that would otherwise have been made at higher margins later in the half.

The Christmas sale and trading through January also did not produce expected sales results.

Growth in the UK in both total and same stores sales was achieved in the period, said Todd.

Online sales growth continued to be strong in all countries, with overall growth of 33 per cent led by an uplift of more than 90 per cent in the UK. Online sales are now 5.8 per cent of total sales.

Kathmandu opened eight new permanent stores in the first half of 2015, all in Australia. The company expects to open a total of 11 new permanent stores in the 2015 financial year.

“Group same store sales have been about two below last year on a constant currency basis in the seven weeks to March 15, a period with very limited promotional activity and low sales volume generally,” said Todd.

“As with every year, the full year result is highly dependent on the sales and gross profit margin performance we achieve in the Easter and Winter sales periods. We have prepared carefully for these sales, incorporating what we learned from the first half.

“Promotional activity has been modified and we are even more focused on delivering benefits to our 1.2 million Summit Club members. Trading in the first week of Easter sale was soft in Australia, but satisfactory in NZ.

“We continue to lay the foundations for future growth at Kathmandu. Our investments in systems, continuing brand leadership in the outdoor and adventure travel categories, and our scale all support continued growth and leadership in Australasia. We remain confident that we can succeed in developing meaningful sales in international markets.

“We look forward to our new chief executive, Xavier Simonet, starting with us on 1 July.”

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