KMD Brands, owner of Kathmandu and Rip Curl, posts record sales

KMD Brands, owner of retail chain Kathmandu and surfwear brand Rip Curl, has posted more than a billion dollars in sales for the first time.

KMD Brands, owner of retail chain Kathmandu and surfwear brand Rip Curl, has posted more than a billion dollars in sales for the first time as it enjoyed the first full year of trading uninterrupted by Covid-19, although sales ­softened in the fourth quarter due to cost-of-living pressures and a warm Australian winter.

That slowing sales momentum from the final quarter has extended into August, with group sales down 6.4 per cent as the warmer weather now blanketing Australia ruins traditional winter sales.

Confirmation this week from the Bureau of Meteorology of an El Nino weather pattern will shake sales for Kathmandu, as people will be less inclined to buy puffer jackets, however, while surfers might not need warmer Rip Curl wetsuits, they would likely pick up Rip Curl boardshorts instead.

KMD Brands – which is listed on the New Zealand and Australian stock exchanges and also owns hiking boots brand Oboz – on Wednesday posted a net profit of $NZ36.6m ($33.68m), down 0.6 per cent as revenue for the 12 months to July 31 rose 12.6 per cent to $NZ1.10bn. There was a large leap in profitability for Kathmandu, while Rip Curl posted a record sales result, although earnings fell as recent high demand for wetsuits began to weaken.

Despite the challenging economic headwinds, the retailer is ­optimistic about the year ahead as people return to outdoor activities such as hiking, camping and surfing as well as travel.

Revenue and underlying earnings of $105.9m, up 15.1 per cent, were in line with a recent trading update and the company posted record sales of over $NZ1.1bn. It declared a flat final dividend of NZ3c per share, payable on October 20.

The diversified retailer had a tough time through the early years of Covid-19, with international travel shut down and millions of its customers stuck under other restrictions, which robbed it of demand for its travel, camping, surfing and hiking products. Supply chain shocks saw a shortage of wetsuits at one stage, while the factory in Vietnam that made its Oboz hiking boots was locked down, causing supply bottlenecks.

There was a large leap in profitability for Kathmandu.

“KMD Brands has achieved record sales of over $NZ1.1bn dollars in our first year of uninterrupted trade post-pandemic, a significant milestone for the group,” chief executive Michael Daly said.

“Strong sales growth was delivered across all key geographies, with Rip Curl and Oboz achieving record sales. Kathmandu sales grew strongly over the first three-quarters of the year.”

Mr Daly said the fourth quarter for Kathmandu was more challenging with increased cost-of-living pressures softening consumer sentiment, and the warmest winter on record in Australia.

This was confirmed in the trading outlook, which showed sales from across its divisions down 6.4 per cent for August.

“We are a winter brand that sells puffer jackets and raincoats and if it’s not raining and not cold it does make it a little bit hard,” Mr Daly said. But he remained upbeat about the year ahead as people embraced travel and outdoor ­adventures.

“The long-term fundamentals of our diversified group of outdoor brands remain intact,” Mr Daly said. “Despite the challenging consumer sentiment, we expect tailwinds with the continued return to travel, positive impact from the launch of innovative products and the outdoor lifestyle trend post-pandemic.

“Our strategic growth pillars remain unchanged, and with new executive appointments in place, we expect to accelerate our strategy execution. We are extremely motivated by the opportunities that lie ahead for our strong and innovative team.”

Kathmandu reported sales of $NZ422.2m, up 10.6 per cent and earnings of $NZ33.3m, up 85.4 per cent. In 2023, Australia sales for Kathmandu rose 7 per cent and New Zealand was up 13.1 per cent.

Rip Curl’s sales rose 8.3 per cent to $NZ581.5m, although earnings fell 9.2 per cent to $NZ44m. The results were underpinned by strong direct-to-consumer results following lockdowns last year, plus the return of international travel to Hawaii and Thailand.

Oboz’s sales soared 61.8 per cent to $NZ99.3m, as earnings jumped 166 per cent to $NZ7.1m, also benefiting from diversified sales channels, delivering strong online sales growth.