Kathmandu dumps guidance as Rip Curl feels coronavirus pain

Kathmandu has ditched its earnings outlook, with newly-acquired Rip Curl feeling the brunt of Europe’s shutdown.

Kathmandu says its supply chains are intact but stores are coming under increasing pressure. Picture: AAP

Outdoor adventurewear retailer Kathmandu has followed the lead of dozens of other companies by withdrawing its earnings outlook in the face of the coronavirus pandemic.

The company warned that the clampdown on travel has dented the performance of its Rip Curl stores, many of which are in European cities under lockdown.

Kathmandu said it faced a “material” impact on its earnings.

Kathmandu paid $350 million for surf group Rip Curl late last year and the retail chain is heavily exposed to the tourism and leisure sectors that are now under immense pressure as movements are restricted and consumers keep away from shopping centres and

This impact of the coronavirus pandemic was also now being felt in Australia and New Zealand This was where the bulk of its Kathmandu stores were located and they had suffered from a fall in store traffic, the retailer said.

Kathmandu said it could therefore not provide a financial forecast for the second half.

“There has been a recent significant reduction in footfall in Australian and New Zealand stores, impacting sales performance.

“Due to the uncertainty around the spread of COVID-19 globally and impacts on demand, at this time, the group cannot forecast the extent to which COVID-19 will impact the business in the second half of this fiscal year.

“However, there is likely to be a material adverse impact to earnings,” it said in a notice to investors.

Kathamndu said sufficient inventory levels were in place for the forthcoming season for all brands, assisted by the longer lead time of technical product categories, and a diversified supplier base.

“Due to recent work from the group’s supply chain team in conjunction with key suppliers, the group is currently not expecting material delays in product availability for following seasons,” it said.

In response to trading conditions Kathmandu said it was taking decisive action, including in reducing operating expenses, deferring non-essential capital projects, optimising labour costs, managing inventory levels and implementing a travel and hiring freeze.

Kathmandu chief executive Xavier Simonet said: “Given the rapidly evolving COVID-19 situation, we have been reviewing available advice and data on a daily basis and taking steps to protect the wellbeing of our team and customers, and to reduce the adverse impact on trading.

“Our channel agnostic approach, and especially our online fulfilment capabilities, should assist our ability to continue servicing customer needs despite growing government restrictions on the operation of retail outlets in many countries.”

Kathmandu will release its results for the half year ended January on March 30.