Ill wind bodes well for outdoor specialist

Kathmandu has benefitted from holidaymakers staying close to home. Photo / Richard Robinson

Outdoor clothing and equipment retailer Kathmandu, which first listed on the New Zealand and Australian stockmarkets in November, is hoping for a chilly winter to boost sales.

The company yesterday reported a net profit of $4.4 million for the six months to January 31 this year, which excluded the costs of listing on the stock exchanges and associated tax deductions.

The net profit compared to a $2.4 million loss in the prior period, caused by the interest costs of servicing debt while Kathmandu was still a private equity-owned company.

Kathmandu's shares floated at $2.22 when first listed last November, and were up 19c at $2.38 yesterday.

The share price hit a low of $1.90 last month.

The company opened eight new stores in Australia and New Zealand during the latest reporting period, including one in Onehunga and another in Timaru. Kathmandu operates 85 stores across Australia and New Zealand, and plans to increase that number to 152.

Kathmandu chief executive Peter Halkett said the company benefited from Aussies and Kiwis holidaying closer to home because of the recession.

An increase in the number of people taking camping holidays had contributed to growth in Kathmandu's camping brand - Base Camp.

"We've ensured that we've kept very tight control of our costs and our margins to ensure that that increase in sales and profitability flowed through to the bottom line," he said.

Halkett said Kathmandu expected overall economic conditions to improve, but there were still uncertainties in the short term.

The effect of the federal Government's stimulus package in Australia was easing off, he said, which made like-for-like improvement on subsequent reporting periods challenging.

Halkett said recovery in New Zealand was fickle.

"It can be up one minute and down the next - very unpredictable."

The biggest influences on Kathmandu's full year result would be the success of the company's Easter and winter sales, which made up a large proportion of total revenue, Halkett said.

"Being a winter-orientated brand we need a good cold winter."

He said the brakes would be put on expansions in the Britain, where Kathmandu operates seven stores in Brighton, Bristol and London.

"We're not intending to expand in that area for some time yet." UBS Investment Research analyst Ray David said growth in the company was expected to come from an increase in the number of Australian stores.

"Kathmandu's New Zealand store base can be generally classified as mature, with current New Zealand sales equating to $21.70 per capita.

"This is almost three times the size of Australian revenue catchment, indicative of the opportunity in Australia."

Kathmandu forecasts full-year net profit to be $30.9 million - a forecast backed up by UBS Investment Research.