March 25, 2023

KMD Brands says full-year profits were down significantly due to Covid lockdowns, but overall sales have bounced back since the closures.

The owner of Rip Curl, Oboz Footwear and Kathmandu announced on Tuesday that group sales increased 6.2 percent in the 12 months to July 31 to $NZ978.8 million ($A865.4 million).

Kathmandu posted its highest revenue ever in the fourth quarter, with total revenue increasing 6.8 percent to $NZ381.6 million.

KMD Brands (which owns Kathmandu) says full-year profits have dropped significantly due to Covid lockdowns, but overall sales have bounced back since the closures

Online sales grew by a quarter and now represents 18.7 percent of all sales, up from 7.7 percent in 2017/18.

But the group’s net profit after tax fell 40 percent to $NZ36.8 million ($A32.5 million), as the lockdowns cost it an estimated $NZ35 million in revenue with more than 11,000 trading days lost.

Oboz was also hit hard by the three-month shutdown of its factories in Vietnam.

A Rip Curl shop in Torquay, south west Melbourne. The surfwear brand is one of those owned by KMD

In the first six weeks since July 31, sales are up 10.3 percent compared to the same pre-Covid period in 2019, KMD said. Sales are up 44 percent from last year when some stores were in lockdown.

But the company sees different sales patterns.

“Our suburban malls and destination stores have been going really, really strongly, but our CBD stores continue to struggle because they don’t see the same amount of people in and around cities – whether they’re employees or… international tourists,” he said. CEO Michael Daly on a conference call to analysts on Tuesday.

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International tourists, including cruise ship passengers, have been important KMD customers and have not yet returned, Daly said.

Kathmandu posted its highest ever sales in the fourth quarter, with total sales up 6.8 percent to $NZ381.6 million (pictured, member of the audience after shopping at a store in Kathmandu)

KMD plans to close a handful of underperforming stores this fiscal year — maybe three to five locations, mostly in CBDs, Daly indicated.

But the company also plans to open another 20 to 40 Kathmandu stores in Australia.

KMD has stores all over the world, but most – 261 of its more than 300 locations – are located in Australia and New Zealand.

It has 30 owned and 16 licensed stores in North America and is working on a ‘soft launch’ with influential outdoor wholesale accounts to expand Kathmandu’s presence there.

KMD Brands plans to open another 20 to 40 Kathmandu stores in Australia (pictured, a store in Elizabeth Street, Melbourne)

“The US market is a very competitive market, as we know,” Daly told analysts.

Speaking openly, it’s the graveyard of many Australian and Kiwi brands looking to enter that market. So we are very careful.’

KMD announced a fully franked final dividend of NZ3c per share, the same as last year. The total dividend for the year is 6c, up from 5c a year ago.

At 2:32 p.m. AEST, KMD shares rose 2.2 percent to 91.5 cents.