Kathmandu owner pins hopes on improved seasonal demand

KMD Brands said Kathmandu had a slow start to the key winter period, and it's hoping for a lift from the northern hemisphere summer. Photo / Jason Oxenham

By RNZ

Outdoor goods company KMD Brands is pinning its hopes on improved summer and winter demand in different parts of the world to counter weak consumer spending and a possible halving of earnings.

The group, which has the Kathmandu, Oboz shoes, and Rip Curl clothing brands, said trading had improved in recent months but sales for the 10 months ended May were down 8.4 percent on a year ago.

Chief executive Michael Daly said the company was looking for a lift as the northern hemisphere summer and southern hemisphere winter get underway.

“With six weeks of peak trade still to come, we remain focused on optimising our Kathmandu winter and Rip Curl northern hemisphere summer results in a challenging consumer environment.”

“We are seeing a prolonged impact of cost-of-living pressures on consumer sentiment globally but particularly in New Zealand, and we continue to respond tactically to competitive market dynamics.”

He said Kathmandu had a slower than expected start to the key winter period, with early sales down 11% on last year, largely on the back of a challenging New Zealand market.

Rip Curl was showing modest growth as the northern summer got underway, but wholesale customers were not buying as much of the clothes or Oboz shoes as they also faced restrained consumer spending.

But KMD warned that because of the weaker sales it expected underlying pre-tax operating earnings of about $50 million, compared to the previous year’s $105.9m.

It said it had also moved to tighten its financial settings and would have about $200m of funding available.

“Alongside immediate trading priorities, our focus remains on tightly controlling operating costs, moderating working capital, and maximising cash flows,” Daly said.

-RNZ