Kathmandu ready for coronavirus hit as Rip Curl lifts earnings

Kathmandu says it’s well prepared for any coronavirus disruption, as earnings surge following the Rip Curl takeover.

Customer Alex Gifford in a Kathmandu store in Brisbane. Picture: AAP

Camping, outdoor adventure wear and surf retailer Kathmandu believes its diverse supply chain in Asia will help mitigate any disruption to supplies from the coronavirus.

But it is monitoring the impact on its Chinese suppliers as the virus spreads.

The retailer also confirmed a shift of sales from traditional buying activity in December to the Black Friday sales in November, as it said bushfires and unusual warm weather around Christmas moderated its first half sales.

Kathmandu, which last year acquired surf retailer Rip Curl, provided a trading update showing rising same store sales growth, as it also alerted the market to the possible impact of the coronavirus.

On Thursday furniture chain Nick Scali warned its shipments from China would be delayed by up to two weeks due to disruption of factories and transport networks.

Kathmandu said it was well prepared for potential disruptions caused by the virus.

“The group sources product from a diverse range of markets throughout Asia, and is actively monitoring any developments on its supply chain as a result of the coronavirus outbreak in China,” Kathmandu said.

“There is not expected to be a material supply impact in the short term as sufficient inventory levels are held, assisted by the longer stock turn nature of technical product categories. Impact on consumer demand across the group is currently not significant.

“The group has mitigation plans in place if there is a prolonged disruption to our Chinese suppliers.”

Turning to its trading performance, Kathmandu said group underlying earnings for the first half were expected to be around 40 per cent higher than the same period last year, following the acquisition of Rip Curl.

The Kathmandu group results for the first half of 2020 will include three months of Rip Curl results from November 1, 2019 to January 31, 2020.

Kathmandu said same store sales rose 1.5 per cent in 26 weeks ended January 26, 2020.

Online sales grew by over 30 per cent, underpinned by enhancements to the online platform.

Its shoe business Oboz continued to grow strongly, with sales rising around 10 per cent.

Rip Curl total sales for the three months of Kathmandu’s ownership were expected to be 2.7 per cent higher than the comparable three-month period last year.

Direct to consumer same-store sales grew 2.6 per cent for the 12 full weeks of ownership from November 4 2019 to January 26.

Kathmandu said Rip Curl-branded stores in Australia traded up 8.3 per cent on a comparable basis in the important summer trading period.

Kathmandu chief executive Xavier Simonet said: “We are delighted to have completed the successful acquisition of Rip Curl, allowing us to significantly diversify our products, geography, and channels to market.

“The Christmas trading period has seen a further shift towards Black Friday and Boxing Day events. Low December market foot traffic between these two events, unusually hot weather, and bushfires in Australia, have combined to moderate first half sales.”