KMD Brands has confirmed the commencement of a full-scale review of its business after a long period of financial turnaround, throughout which it has managed to grow sales across its portfolio.
The owner of Kathmandu, Rip Curl, and Oboz reported a 5.2 per cent increase in sales for its fiscal third quarter from the previous year. This figure was led by Kathmandu’s strong, 12 per cent uplift.
KMD has managed to lift its gross profit margin to 58.2 per cent, a 258 basis point increase year-on-year.
“It’s pleasing to see momentum building in our next-level execution. Despite challenging broader market conditions, the group has continued to deliver encouraging progress in Q3, balancing sales execution and gross margin expansion together with operational and cost discipline,” said Brent Scrimshaw, CEO and MD of KMD Brands.
The financial disclosure comes on the back of the group’s enlistment of Goldman Sachs to undertake an equity raise, a process which saw a six-day delay in the release of its half-year earnings report, a $65.5 million sale of shares at a 70 per cent discount, and the resignation of its then chair, David Kirk.
In March, the group also rejected a demerger offer for its Rip Curl brand.
“The quality of earnings across the group is strengthening, supported by disciplined pricing, improved product mix and ongoing cost control,” Scrimshaw added. “Nine months into the first year of execution, our transformation strategy is demonstrating that we are building a stronger, deeply connected and more resilient business, while remaining on track to achieve our medium-term targets.”
Going forward, the group announced a business review to “improve returns for shareholders”. This review will look at KMD’s capital structure, its portfolio, and “other value-creation opportunities”.
“Our commitment to creating long-term value for shareholders is the board’s clear priority,” Philip Bowman, chair of KMD Brands, said.
“In parallel with our focus on improving KMD Brands’ operating performance, this business review is an appropriate next step at this time.”
