Kathmandu, Rip Curl and Oboz footwear owner KMD Brands’ solid sales and profit growth

Sales improved at KMD Brands, which owns Kathmandu and Rip Curl, but the retailer is cautious on the outlook amid rising interest rates and inflation.

KMD Brands, the owner of Kathmandu, Rip Curl and Oboz footwear, is witnessing improving sales across all its retail operations and improving supply chains, which is helping to get its products into stores.

However, the group is cautious around the impact of rising interest rates and inflation on consumer sentiment.

The retailer had suffered through the worst of Covid-19 lockdowns across a number of key markets when the pandemic emerged, and was also hit by supply chain disruptions that caused a shortage of wetsuits at its Rip Curl business and the shutdown of its key Oboz factory in Vietnam.

But now coming out of lockdowns and with consumer spending back up, and supply chains strengthening, KMD has posted a strong lift in first quarter sales and profit growth.

The retailer on Wednesday reported group total sales were up 61.8 per cent above the first quarter of 2022, reflecting the removal of Australasian lockdowns and a return to more normal trading.

Group total sales ware up 17.5 per cent above the first quarter of 2021, which was pre-Covid.

KMD said its first quarter 2023 underlying operating profit had improved by nearly $30m year-on-year.

Direct-to-consumer same store sales growth for the 14 full weeks ended November 6 at its outdoor adventure apparel business Kathmandu were up 107.2 per cent, and surfwear outfitter Rip Curl up 29.7 per cent.

Its North American boots brand Oboz hit record first quarter wholesale and online sales, with supply no longer a constraint after disruptions last year caused by the lockdowns in Vietnam saw almost half its orders go unfilled.

KMD said the forward order book and inventory position for Oboz supported ongoing growth.

It said group gross margin remained resilient, with improved margin for the Kathmandu brand.

“KMD Brands achieved a positive result in the first quarter of 2023, with strong sales growth across all brands compared to both prior year and pre-Covid levels,” said chief executive Michael Daly ahead of its annual general meeting.

“Pleasingly, gross margin and profitability are holding up well, with group underlying operating profit for the first quarter of fiscal 2023 improving by nearly $30 million year-on-year.”

“Looking forward, while current trading for our three brands is strong, we remain cautiously optimistic, with the potential of high inflation and rising interest rates impacting consumer sentiment in our key global markets. As always, the first half year results remain dependent on the key Black Friday and Christmas retail trading periods still to come.”

In September, KMD posted a 40 per cent slide in its full-year net profit to $NZ36.8m ($32.8m).

The annual result reflected the impact of lockdowns, travel restrictions, store closures and the protracted shut down of a key Oboz factory in Vietnam, but a resurgence towards the end of the year helped sales for the 12 months to July 31 rise 6.2 per cent to $NZ979.8m.