KMD Brands posts grim figures two months on from Rip Curl boycott calls: 'Lack of connection with target consumers’

An investor presentation reveals that the famous surf brand experienced a significant business decline just two months after facing a fervent boycott threat.

The owners of Rip Curl has suffered hefty a blow in the first half of the financial year, with recent calls for a boycott of the surfing brand set to hit finances even harder.

Kathmandu Brands, the New Zealand-based owner of the outdoor gear retailer as well as Ripcurl, published its results from the first half of the financial year on Tuesday showing that the company recorded a loss of $9 million.

KMD Brands, owner of Kathmandu and Rip Curl, suffered a loss of $AU9 million in H1 2023. Picture: Brad Fleet.

This is in contrast to a profit of $13.02 million in the previous financial year.

The sales of the company were down 14.5 per cent, totalling $435.496 million.

The company has chalked up the plunge to “ongoing weakness in consumer sentiment” and a warm 2023 winter.

The results presentation stated in reference to Kathmandu sales: “A combination of weaker consumer sentiment, the warmest winter on record in Australia, and the brand’s reliance on winter weight product has resulted in a disappointing first half.”

The presentation added that Rip Curl and Oboz, a hiking footwear brand in the KMD stable, “had cycling record sales last financial year.”

Sales of Kathmandu Brands were down 14.5 per cent amounting $435.496 million. Picture: Supplied

“While revenues from the direct-to-consumer channel for these brands are showing single digit declines (-4.4 per cent) the wholesale channel has been more challenging (-16.8 per cent) as wholesale customers reduce inventory holdings,” the presentation stated.

At Rip Curl, sales fell 9.2 per cent to $258.969 million, but the company clung onto a profit of $19.344 million.

Direct-to-consumer sales, including online purchases, slumped 5 per cent which it said was “reflecting weakened consumer sentiment in key global markets” while stronger results were recorded in Europe, Asia and South America.

Rip Curl wholesale was down 14.1 per cent as wholesale accounts reduced inventory holdings.

“We expect the wholesale customer inventory reduction cycle to end this financial year, giving us a more positive FY25 outlook in the wholesale channel,” the investor presentation said.

A section of the presentation outlining challengers facing KMD brands stated, “execution of the rebrand since 2021 has been inconsistent” and that there was a “lack of connection with target consumers.”

Boycott backlash impact yet to be felt

The bleak results comes almost two months after global outrage against a Rip Curl marketing decision to include a West Australian trans-woman competing professionally in Australia.

There was fierce backlash from customers, with some labelling it Rip Curl’s “Bud Light moment”.

While KMD Brands cites consumer sentiment for its first half results, it’s yet to be seen if or how the furore will be reflected in the brands second half earnings.

A boycott against Rip Curl, caused by a controversial marketing decision, potentially contributed to the company’s losses.

Rip Curl customers posted themselves destroying their purchases in protest of the brand's decision to endorse a professional transgender woman surfer.

#BoycottRipCurl became a trending topic in late January after the brand featured a professional longboarder and trans woman in its Rip Curl Women Meet The Local Heroes of Western Australia marketing campaign on social media.

Rhetoric from surf media at the time suggested opponents to the marketing decision saw it as an affront to surfing icon Bethany Hamilton, who many believed parted ways with the brand over her opposition to a 2023 decision to allow trans athletes to compete in WSL surfing events.

Customers across the globe went online posting themselves destroying Rip Curl clothing and accessories in response.

Darwin’s Steve Gleeson was one of them.

“Go woke, go broke – f*** you, Rip Curl,” the Northern Territory dad said to the camera before tossing his boardies into a fire.

Rip Curl caused a rift among its followers over the move as seen in this January post. Picture: Instagram

The World Surf League, the peak governing body for professional surfers, adopted the International Surfing Association’s (ISA) policy for transgender participation in early 2023, causing a rift in the surfing community.

The International Olympic Committee recognises the ISA as the world governing authority for surfing, and the WSL cites this in its decision to follow suit.

The policy requires athletes assigned male at birth to maintain specific testosterone levels continuously for the previous 12 months to be eligible to participate in women’s events.

Surfing royalty, including Hamilton and men’s former world champion Kelly Slater, pushed for the creation of a separate transgender division within the sport after the announcement.

Hamilton’s commercial relationship with Rip Curl ended soon after.

Rip Curl said this post ‘landed us in the divisive space’.

“Our recent post has landed us in the divisive space around transgender participation in competitive sport,” a Rip Curl spokesperson told surf publication Shop-Eat-Surf.

“We want to promote surfing for everyone in a respectful way, but recognise we upset a lot of people with our post and for that, we are sorry.

The spokesperson alluded to Hamilton’s disassociation from the brand stated: “To clarify, the surfer featured has not replaced anyone on the Rip Curl team and is not a sponsored athlete.”

Popular new tact

KMD Brands’ investor presentation noted a revival of Rip Curl’s hugely popular ‘The Search’ vision as part of its “continued brand innovation”, labelling it a “primary product, creative and marketing vehicle”.

Over the weekend, Rip Curl and eight-time world champion Stephanie Gilmore inked an eight-year, multimillion-dollar sponsorship deal.

Australian surfing star Stephanie Gilmore has signed a new deal with Rip Curl. Picture: Trent Mitchell

Speaking on the deal, the Australian women’s surfing star said it felt “like a new era in my career”.

“In taking a year off, my aim was to just go surfing. To reconnect with what surfing really means to me and how I can share that with the world,” she said.

“When this opportunity came up to join The Search with Rip Curl, travelling the world, finding waves, having fun, it was the perfect alignment.”

The announcement on the brand’s social media channels hint at a marketing win for Rip Curl with tens of thousands of positive reactions.

“Perfect symbiosis,” one wrote.

“New standard for sponsorships in the surfing world,” fellow pro surfer Felicity Palmateer exclaimed.

“(It) doesn’t get much bigger than this …. great to see,” said another.

Gilmore plans to return to competitive surfing in 2025.

Originally published as KMD Brands posts grim figures two months on from Rip Curl boycott calls: 'Lack of connection with target consumers’