However, the group’s namesake brand recorded a NZ$7.1 million loss due to lack of demand for rainwear and insulation products that customers would typically have purchased prior to travelling to Europe and North America. This was despite Kathmandu’s pivot to categories better suited to the rise in local tourism, such as camping and hiking, and increased online sales.
“Despite operating in challenging conditions over the first half due to the substantial impacts from Covid-19, Rip Curl delivered an outstanding first-half result, validating the group’s diversification strategy,” said Xavier Simonet, Kathmandu’s outgoing group CEO.
Rip Curl sales surge, Kathmandu wipes out
Rip Curl’s sales grew to NZ$251.1 million in the first half of FY21, an 86.1 per cent increase on the prior corresponding period, which included three months of sales pre-Kathmandu ownership. The surf brand contributed NZ$48.7 million to the group’s underlying earnings before interest, tax, depreciation and amortisation.
Kathmandu’s sales fell 34.9 per cent to NZ$127.3 million, and same-store sales were down 35.4 per cent. After adjusting for the Covid-19 lockdowns, which saw 27 stores in Greater Melbourne and 14 stores in Auckland closed for over 11 weeks, same-store sales were down 30 per cent.
Sales at Oboz, a North American footwear brand, grew by 3.8 per cent to US$22.1 million, thanks to product innovation. However, its gross margin was impacted by significant one-off air freight costs of US$1.1 million. A new online store supporting direct-to-consumer sales is set to launch in the near future.
Looking ahead to the second half of FY21, Simonet said the group is focused on executing Kathmandu’s winter season in Australasia and cutting costs, which he expects to deliver around $15 million of annual savings.
“Whilst navigating the ongoing impacts from Covid-19, our long-term strategy remains unchanged,” he said.
Retailers see uneven impact of travel bans
Just last week, JB Hi-Fi CEO Richard Murray described international travel restrictions as being “very good for retail”.
“Last year, we suddenly discovered a number: $60 billion – which is money that Australians spend overseas,” Murray said at a conference hosted by the Australian Retailers Association (ARA), The Age reported.
“Whilst we feel for international tourism operators…while Australians can’t travel, the harsh reality is that money is staying in Australia. And with low-interest rates being pretty good for the property market…[this has been] very good for retail.”
But Kathmandu’s first-half sales show it’s not just international tourism operators and travel retailers at airports that have been impacted by the bans. Not all retailers are reaping the benefits of customers buying new clothes and gadgets with money that they would normally have spent on overseas travel.
“The fact consumers are not able to travel overseas has impacted retailers across a number of product categories and I think the impact will be much more visible as we move through 2021 and the borders continue to remain closed,” Louise Grimmer, a senior lecturer in marketing at the University of Tasmania, told Inside Retail.
“[The] retailers most affected are those selling clothing and footwear, such as Kathmandu and their competitors, also those stores selling travel accessories such as suitcases and travel bags, stationery and books, and even those retailers selling toiletries and cosmetics will have seen a dip in travellers purchasing specific items for travel,” she said.
Aside from a travel bubble between Australia and New Zealand, restrictions on international travel don’t appear to be lifting anytime soon. But ARA CEO Paul Zahra believes it’s time for the borders to open.
“The Covid situation is stabilising with the rollout of the vaccines and state restrictions around masks and venues starting to ease,” he told Inside Retail.
“We now need to see that translate into a staged reopening of international borders to ensure travel retailers, who have suffered the worst during the pandemic, can thrive once again.”