Xavier Simonet, chief executive and managing director of Kathmandu Holdings. Photo / Supplied
Xavier Simonet, chief executive and managing director of Kathmandu Holdings. Photo / Supplied
Kathmandu's chief executive Xavier Simonet sees the public company as a New Zealand brand "born in the mountains".
Simonet, 48, first encountered the outdoor equipment and clothing retailer when he bought one of its jackets on a rainy day in Wellington 20 years ago. He didn't know much about the firm at the time, but says he still has the jacket today.
Kathmandu has had its ups and downs in that time, with its share price plunging and more recently rising. In its latest move, the company acquired US outdoor footwear business Oboz for US$60 million ($83m), not including potentially US$15m more if Oboz hits its targets.
"It's really exciting for everyone - our shareholders, our teams, to think, 'Gosh, we were born in the mountains of New Zealand and now we're looking at the world and starting to expand through an acquisition," Simonet told the Business Herald.
"I think [Oboz is] a dream distribution for Kathmandu, and if we can launch in the US with the same type of distribution they have, it will be brilliant."
Simonet says he is excited to see Kathmandu expand into the States, bolstered by Oboz, which is already established there.
The father of five, who started in the role of CEO a day after Briscoe Group announced that it wanted to take over Kathmandu, has been heading the company since June 2015 from its Australian office in Melbourne.
He holds dual Australian and French citizenship, and has a passion for travel.
Unnervingly private and unwilling to share much detail about himself, Simonet was born in Brittany. He has a strong 23-year history in the apparel business.
Simonet studied political science at the Paris Institute of Political Studies, or Sciences Po, before winding up at luxury group Louis Vuitton Moet Hennessy. He was there for 12 years between 1995 and 2006, in various roles and locations including Hong Kong, Singapore, Sydney, London, Paris and Scandinavia.
He also completed a certificate in marketing at Harvard and a diploma from international business school HEC Paris.
Before taking the reins at Kathmandu, Simonet worked in London as chief executive of luxury leather handbag and accessory company Radley & Co.
He worked for Australian swimwear brand Seafolly for four years, before becoming international group general manager for DBApparel Group.
Before his fashion career, he worked as an auditor for PwC Cameroon in the city of Douala.
Kathmandu employs 2000 people: 160 at its Christchurch HQ, 60 in Melbourne and more than 1500 throughout its retail stores.
The retailer, which was last year given a B+ grade for ethical fashion practices from relief and development group Tearfund, has committed to send zero waste to landfill by the end of the year.
"The zero landfill target is a big one for us, which we set out about three to four years ago," Simonet says. "We're quite lucky in the retail industry in that we have relatively easy materials to manage, so the majority of the materials which go through our store network include mainly cardboards and soft plastics."
In New Zealand, the company has almost achieved its goal of recycling 100 per cent of all soft plastics throughout its stores.
"Sustainability is really in the DNA of the company, it's not just something we've just started," Simonet says. "Our sustainability work covers a variety of prioritisation across materiality, human rights, right down to our materials and products and our operational footprint."
Kathmandu announced its purchase of Oboz Footwear - its first acquisition - almost a month ago during its half-year results presentation.
"Oboz is a great company and we've been selling their shoes in our stores for 10 years so we know the company very well, and share the same values in terms of passion for the outdoors," Simonet says.
"We never had an acquisition strategy as we weren't really looking for companies to acquire, but we've known Oboz for 10 years and started talking about deepening the partnership about two years ago. We didn't know what shape and form that would take and whether it would end up as an acquisition or something else."
Oboz Footwear will help Kathmandu expand into the US. Photo / Supplied
Kathmandu sees two benefits from the deal: faster international expansion and diversifying its risks.
"We believe that we can be bigger internationally, and acquiring a company in the US is straight away creating a strong presence for us. With Oboz and Kathmandu combined, roughly 10 per cent of our total sales come from the US," he says.
"We feel as a business, we are too exposed to one geography, which is Australasia."
Kathmandu will now focus on more exposure for the footwear category, and wholesale, as solely operating retail stores is a risky business, Simonet says.
"[We are] starting to diversify the risk profile of the company by having a stronger presence internationally, by having a stronger presence in another channel - not just retail - and this other channel is wholesale as Oboz operates through wholesale customers in the States.
"Footwear in the outdoor category is a really interesting product because footwear is not driven by seasonality. We see this a lot with our core products, which we sell more of in winter, or are driven by the weather, so Oboz will help us diversify our risk profile in terms of exposure to seasons and to the weather."
For the six months to January 31, Kathmandu reported a profit of $12.3m, up 23 per cent on the same period last year. First-half sales rose 4.3 per cent to $204.8 million, in line with its forecast.
"It's always pleasing to deliver better profits," Simonet says. "What's happened in the first-half is [the result of] a focus on margin expansion, increasing our margin but also a very tight control on costs.
"Last year we had much more clearance stock so it's good and bad - good, because it forces customers to buy new, exciting products and it gives us higher margins, but bad in the sense that some customers like better value, clearances and cheaper products.
Kathmandu's share price plunged 21 per cent in December 2014. Graphic / NZ Herald
"We had less clearance stock because sales had been good during the season."
Kathmandu issued a positive trading update for the first six weeks of the second-half period, with same-store sales growing by about 7 per cent.
The retailer hit rock bottom in June 2012 when its stock traded at $1.27 a share. It then hit an all-time high of $4 in 2014, before diving again. More recently the share price has been recovering, to around $2.60 today.
Simonet joined the company shortly after its 2014 share slump, with the goal of helping it recover.
During his two-and-a-half years at Radley & Co, Simonet helped treble profits. And he credits Kathmandu's revival to putting the focus "back on" product.
"Our job is to bring our customers products that are solutions when they travel or go to the outdoors, so we've put a strong focus on bringing to market distinctive and sustainable products, and I think this strategy is working."
Digital marketing and social media also played a part, he says.
When Simonet left France 20 years ago, it was to travel and live an international life.
"I was very passionate very early on for travel, and I just wanted to move overseas and experience travel, other cultures, meet other people, and that's what I started to do when I was 15 and actually never stopped.
"There were two key reasons why I joined Kathmandu. One was because this business is around travel, and this is my life, so ... the alignment on that value of travel, and the second one, is sustainability.
"My life's always been around travel and so I've always been eager to take opportunities that are related to travel."
Inside Kathmandu's Queen St store in Auckland. Photo / Nick Reed
His first stint in Australia, which he now calls home, was with Louis Vuitton Moet Hennessy, to set up a subsidiary for one of its brands.
"My wife and I love so much this part of the world that we got permanent residency and moved back to Australia, and then became citizens," he says.
As of July last year, Kathmandu had 163 stores throughout Australia and New Zealand, and one in London's Kensington. It is targeting a total of 180 across Australasia.
But opening physical bricks and mortar stores in the US is not part of Kathmandu's expansion plan, Simonet says, probably spooked by the failure of its UK store network, which formally closed in 2015.
"That's something we've tried but it's too complex to operate stores on the other side of the world for us, and it was not profitable," he says.
"If you look at what big outdoor brands do - [The] North Face, Columbia etc, they've got a blended distribution model - own stores, wholesale partnerships, online shops and this is basically what we're doing. So far we have our own bricks and mortar stores but now we're going into wholesale and expanding online."
Kathmandu listed on the NZX and ASX in November 2009, five years after it was established in 1987 by John Pawson and Australian businesswoman Jan Cameron.
The company's first retail stores opened in Australia, while it manufactured most of its original clothing ranges in New Zealand.
The first New Zealand store opened in Christchurch in 1991.
Xavier Simonet
• Age: 48 • Born: France • Job title: Kathmandu CEO • Family: Married, five children • Education: Marketing certificate from Harvard Business School, diploma in political science from Sciences Po and diploma from HEC Paris • Employment History: CEO at Radley & Co, international GM at DBApparel Group, international director at Seafolly Australia, various roles at Louis Vuitton Moet Hennessy Group including managing director at Guerlain UK and Ireland
