LA Private

KMD Brands takes a dive

Kiwi-based sportswear retailer KMD Brands (ASX:KMD) has confirmed the weak guidance issued a month ago for a slump in sales and a big loss for the half year to the end of January.

The company had warned of the weak result for the January 31 half year in a trading update issued on February 20.

KMD Brands said sales revenue declined by 14.5 per cent to NZ$468.6 million in the period, compared to NZ$547.9 million for the first half of 2022-23.

That saw earnings plunge almost 170 per cent to a net loss of NZ$9.7 million from NZ$13.9 million a year ago.

The slide came despite a NZ$15.8 million drop in costs for the six months to January 31.

And the company confirmed that there is no interim dividend.

KMD Brands group CEO Michael Daly said sales decreased across all three of its retail brands (Kathmandu, RipCurl and Oboz).

“Weaker consumer sentiment, the warmest winter on record in Australia and an over-reliance on winter weight product led to a disappointing first half for Kathmandu,” Daly told the market in the release.

“In a challenging sales environment, the group improved gross margin despite currency headwinds, controlled operating costs, and reduced working capital.”

“Rip Curl and Oboz are cycling record sales last financial year, and while revenues from the direct-to-consumer channel are showing single digit declines, the wholesale channel has been more challenging for both brands as wholesale customers reduce inventory holdings.”

“In a challenging sales environment, the Group improved gross margin despite currency headwinds, controlled operating costs, and reduced working capital,” he said.

The company said it was looking at an improvement in the current second half.

KMD said sales trends improved in the first couple of months, with group sales for February down 3.5 per cent from last year.

“Improving Kathmandu sales performance is our immediate priority as we approach the key winter trading period,” Daly said in Tuesday’s statement.

“We expect to see progress in the second half and into FY25 as we launch new innovative products, quick to market programmes, elevated visual merchandising, increased personalisation through the recently released ‘Out There Rewards’ and an expanded third-party brand strategy.”