Kathmandu cites supply chain issues, says Rip Curl wetsuits in short supply

Kathmandu says wetsuits are in short supply. Photo / Surfing Magazine

Outdoor clothing and equipment retailer Kathmandu says supply chain issues continue to be challenging and goods, including wetsuits sold through subsidiary Rip Curl, could be in short supply in the lead-up to Christmas.

The listed company, which sells outdoor clothing and camping gear and owns the newly acquired Rip Curl surfing brand and footwear chain Oboz, held its annual shareholders' meeting today.

Group chief executive and managing director Michael Daly noted that demand for wetsuits in particular was "exceeding available supply".

"Whilst Rip Curl and Oboz wholesale orders remain significantly above pre-Covid levels, the supply chain continues to be a challenge globally, particularly impacting the flow of products into our North American markets," he said.

However, the company was well prepared for the key Black Friday and Christmas trading periods.

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"Inventory remains sufficient to meet expected demand overall," he said.

Oboz product deliveries will be impacted in the second quarter, as Vietnam footwear factories slowly ramp up production following closures due to Covid-19, Daly added.

Freight, logistics, and raw material costs remain elevated which will be managed where possible through increased pricing and raw material substitution.

The retailer's profits have been significantly hit by the recent round of Covid lockdowns in New Zealand and Australia.

The company is forecasting a $35 million reduction in profit in the three months ended October 31.

Kathmandu's chief executive and managing director Michael Daly. Photo / Supplied

However, Daly said there was a growth opportunity, particularly in the second half-year, as the company hoped to trade the full period compared to lockdowns in June and July last year.

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Daly said the first quarter was heavily impacted by Covid-19 closures, which were longer and deeper than the same period last year.

Same store sales for Rip Curl were down 9.4 per cent below last year overall (including online), and for Kathmandu down 17.6 per cent below last year.

However, when we exclude stores forced to close because of Covid-19 lockdowns, we have seen positive growth, he said.

Daly said the group's online channels had been strong, with 33.8 per cent growth.

"With Rip Curl up 11.2 per cent, and Kathmandu up by 58.4 per cent," he said.

In September Kathmandu's profit jumped in the 2021 financial year with a full contribution from Rip Curl but the retailer said store sales in the past six months had been significantly impacted by transtasman Covid lockdowns.

Net profit climbed to $63.4 million in the year to July 31, up from $8.9m the previous year which included transaction costs related to the $368m acquisition of surf brand Rip Curl.

Underlying earnings before interest, tax, depreciation and amortisation (ebitda) rose 35.9 per cent to $113.3m and total sales climbed 15.1 per cent to $922.8m. Gross margins improved by 40 basis points to 58.7 per cent.

The company declared a final dividend of 3c a share, taking the total full-year dividend to 5c a share.