Kathmandu chief remains confident on turnaround

A JB Were analyst says it is premature to dismiss a reversal in Kathmandu's fortunes. Photo / Nick Reed

Outdoor retailer Kathmandu is facing pressure to perform in the coming financial year after a poor 2015 full-year result.

Despite this, chief executive Xavier Simonet is optimistic.

The Christchurch-based company announced it was closing its stores in the UK, but would continue to sell online there, after posting a $20.4 million net profit for the year ended July 31, down 51.6 per cent from the previous year. Aggressive discounting to move stock as well as decreased demand in Australia was blamed for the lower profit.

"Obviously the result is disappointing but there is really no new news versus what we announced in the target company statement months ago," Simonet said. "[Kathmandu] is a great brand with a great and passionate team, and that's one of the main reasons why I joined the company - it's a fantastic retail business," he said.

Sales for the year rose from $392.9 million to $409.4 million and Simonet reaffirmed the company's commitment to deliver on FY16 numbers, with sales expected to reach $454.6 million and earnings before interest and tax to rise to $48.2 million from $33.2 million this year.

According to JB Were's Rickey Ward, there was still a way to go.

"What we have seen in the past is with Kathmandu, things turn around very very fast depending on conditions and on consumer spending behaviours," Ward said. "So it's pretty harsh to dismiss the chance of that occurring, but there's a long way to go from what it delivered today to where it's got to get to to meet its expectations," he said. "All eyes will be on the trend and certainly momentum of whether there's a chance that can be achieved or not."

The retailer managed to fend off a takeover bid earlier in the month from Briscoe Group which amounted to $1.80 a share in cash and scrip, after advising its shareholders that the offer was too low and to reject it.

Simonet said there was no added pressure to deliver to shareholders having refused the takeover offer, but Ward said the market would want to see how the company was tracking.

"If they don't deliver on FY16 expectations the whole board of Kathmandu will come under the microscope," Ward said.

"They've made very public comments about what they expect to deliver and therefore, the reasons why shareholders should reject the Briscoes offer."

Simonet said the company's head office restructure had been completed, resulting in the loss of 15 jobs, but said he was not expecting any further job cuts at the company. He said the focus for the coming year would be on driving efficiencies in the business, particularly in what he saw as its core business in New Zealand and Australia.

The company would confirm its strategy for the year in the coming months.

The company will pay a final dividend of 5c per share - totalling 8c for the year, down from 12c last year.

Shares in Kathmandu closed down 1c to $1.40.

Kathmandu 2015

• Profit down 51.6%
• Sales up from $392.9 million to $409.4 million
• FY16 forecast sales of $454.6 million
• Ebitda to reach $48.2 million in FY16
• Total year dividend of 8c compared with 12c last year
• Australian sales rose 7% to $264.6 million
• NZ sales declined 1.3% to $139 million