Kathmandu forecasts lift in annual profit on higher margins, sales; shares jump to month high

Wellington Kathmandu outlet store.Photo by Lynn Grieveson

Kathmandu Holdings, the outdoor equipment retailer, expects to increase profit this year on higher sales and better margins.

The Christchurch-based company said it expects net profit of $48 million to $52 million in the year ending July 31, from $38 million last year. Earnings before interest and tax are expected to be between $72 million and $77 million, from $57 million last year. Sales are up 7.7 percent so far this year covering the 47 weeks to June 24, it said.

The company's shares rose 3.2 percent in early trading to a month high of $2.58, and have gained 2.9 percent so far this year.

Under the management of chief executive Xavier Simonet, who started the role in June 2015, Kathmandu has been discounting less, selling more product at full-price and achieving a higher average selling price. So far this financial year, the company's gross profit margin is 240 basis points, or 2.4 percent, above last year, it said today.

On a same-store basis, Australian sales in the 47 weeks to June 24 are up 7.7 percent, with a 1.9 percent increase in the first half and a 14 percent jump in the second half to date. In New Zealand, same-store sales to date are down 1.5 percent, with a 6.3 percent decline in the first half and a 4 percent rise so far in the second half.

“Our second half so far has been strong across both Australia and New Zealand, with Australia experiencing double digit same store sales growth," Simonet said in the statement. "The autumn season and the start of our key winter promotion have delivered higher sales and profit than planned. The successful launch of innovative new products, enhanced in-store customer experience, inspiring content and engagement on social media and digital channels have contributed to the performance.”

Kathmandu will release its full-year earnings on Sept. 18.