Lockdowns wipe Kathmandu sales, profit as retailer prepares for Black Friday, Christmas

Despite lockdown setback, Rip Curl owner Kathmandu says demand for wetsuits is exceeding supply amid shipping delays and a raw material shortage.

Outdoor clothing and surfwear retailer Kathmandu has warned its operating profit will be crunched by as much as $33.9m in the first quarter, blaming lost sales during pandemic-induced store closures.

The retailer also cautioned surfers to brace for a shortage of wetsuits with demand for the key surfing gear exceeding supply, reflecting the heavily disrupted global supply chain.

Kathmandu, which also owns the Oboz footwear brand, revealed in a trading update on Tuesday the growing impact of the pandemic, shuttered stores and lockdowns in its key Australasian markets, with sales growth for its key retail chains Kathmandu and Rip Curl diving deep into negative territory.

It also warned that higher freight and shipping costs as well as steeper prices for raw materials was also weighing on the company as it became the latest retailer to signal that the disruption to global supply chains was starting to bite.

However, Kathmandu moved to reassure investors that it was well placed in terms of inventory for the upcoming Black Friday and Christmas trading period, but did not provide an earnings outlook due to the uncertainty swirling through the economy.

However, it expects growth in the second half as markets reopen.

Wetsuits remain in hot demand for Rip curl. Picture: Steve Pohlner

The trading update for the 13 weeks to the end of October, issued ahead of its investor day, revealed that sales including online were significantly affected by ongoing Covid-19 lockdowns in Australia and New Zealand.

Rip Curl sales were down 9.4 per cent, but up 1.6 per cent if adjusted to remove stores that were closed. Kathmandu sales had taken a beating and were down nearly 18 per cent, but up 16 per cent adjusted for Covid lockdowns. Still, online sales surged nearly 34 per cent, with Rip Curl and Kathmandu reporting gains of 11 per cent and 58 per cent, respectively.

Kathmandu chief executive Michael Daly said Covid-19 continued to be a major disruption in the first quarter, with stores significantly affected by lockdowns, and supply chain disruption affecting the company’s ability to fulfil strong wholesale demand.

Kathmandu’s share price ended Tuesday up 1c, or 0.7 per cent, at $1.52.