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Kathmandu sales bounce back, but confidence wanes

Outdoor retailer Kathmandu signaled a recovery to same store sales growth, as well as a continued shift of its customers online, but remains cautious about the longer-term state of the retail industry.

Since lockdown measures across Kathmandu’s store network have eased, the last six weeks have seen same store sales grow 12.5 per cent – made up of a 2.2 per cent lift in in-store, and a 78 per cent lift online.

Recently-acquired Ripcurl saw a similar jump, with total sales up 21 per cent on a 5.1 per cent growth in-store and a 151 per cent jump in online sales.

Because of the heightened level of uncertainty created by the COVID-19 pandemic and the subsequent economic fallout, however, Kathmandu chief executive Xavier Simonet is keeping a wary eye on the next few months.

“Whilst wear pleased with the strong recovery in direct to consumer sales over the past six weeks, we remain cautious about medium-term levels of consumer demand,” Simonet said.

“We believe that some short-term factors, including Government support packages and pent up demand are underpinning current sales.

“The heightened level of uncertainty that currently exists is likely to persist over the medium term, and we are focused on being well prepared to respond to the associated risks and opportunities as they emerge.”

Much of this uncertainty exists for Kathmandu since, despite direct to consumer sales jumping, its wholesale business has lagged substantially – Ripcurl’s global wholesale sale’s fell 26 per cent below the comparable period of 2019, before Kathmandu had acquired the surf brand.

And based on the fact that Kathmandu’s brands now trade across areas in Asia Pacific, North and South Americas, and Middle East with Ripcurl’s acquisition, it is grappling with wildly different responses to COVID-19 across it’s network.

As such the business expects its FY20 adjusted EBITDA to reach above $70 million – before taking into account the impact of IFRS 16, $10 million Ripcurl acquisition costs and other non-cash one-off items.

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