Outdoor goods and clothing company Kathmandu has fallen to a first half loss as Covid-related disruptions and higher costs eroded margins and restrained sales.
Kathmandu Head Office in Christchurch. Photo: RNZ / Nate McKinnon
Key numbers for the 6 months ended January compared to a year ago:
- Net loss $5.5m vs profit $22.3m
- Revenue $407.3m vs $410.7m
- Gross margin 57.7% vs 59%
- Interim dividend 3 cents per share vs 2 cps
The company, recently renamed KMD Brands, said it had taken the hardest hit the first quarter as Covid forced store and factory closures, before picking up in the second three months.
"Results were underpinned by positive second quarter sales following first quarter Covid lockdown impacts on Kathmandu and Rip Curl in Australasia," chief executive Michael Daly said.
The lockdowns had cost company about $35m, but the second quarter rebound had delivered higher sales than the year before.
Of the three brands it operates, surf wear retailer Rip Curl withstood the pandemic pressures the best with a small rise in sales, while the better known Kathmandu stores sales were marginally lower, and footwear maker Oboz, which was hit by closed factories, had a 30 percent fall in sales.
The group's operating expenses rose nearly 16 percent, which cut into its margins.
"Gross margin was impacted by significant international freight costs averaging more than 300 percent over the historical average."
Kathmandu said it was carrying $20m more stock than the year before as a way to minimise production and supply disruptions.
Daly said the outlook would have challenges but was bright.
"While we continue to navigate impacts from COVID on global supply chains, forward demand for our Rip Curl and Oboz products remains at record levels, and Kathmandu enters the traditionally strong winter season well prepared."
He said it planned to build the brands into global names with online expansion into Europe and Canada, as well as a relaunch of its loyalty scheme.