Outdoor apparel retailer Kathmandu, which is being hard-hit by a tough retail environment on both sides of the Tasman, is expected to post a drop in profit in its interim result tomorrow.
Goldman Sachs analyst Buffy Gill has forecast the firm's half-year net profit to fall 21 per cent on the prior comparable period to $8.3 million, while earnings before interest and tax are expected to drop 17 per cent to $19.3 million.
Some of the things to look out for in tomorrow's result were weak like-for-like sales, excess inventory, lower gross margins and weaker cash flow, Gill said.
The company, which is listed in Australia and New Zealand, advised the market just before Christmas that festive season trading had not met management's expectations and earnings before interest, tax, depreciation and amortisation (ebitda) were expected to fall below the $23.2 million achieved in the same period a year earlier.
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At that time chief executive Peter Halkett said trading had taken a turn for the worse in the last week of November and same-store sales had been negative on the prior year during December.
The news prompted a major sell-off in Kathmandu shares, which saw the company lose a quarter of its market value in a single day.
In the market update Halkett said trading late last year had been stronger in New Zealand than Australia.
In December, amid signs of falling consumer sentiment across the Tasman, Aussie investors were dumping retail stocks that showed any signs of danger.
Shares in ASX-listed surfwear retailer Billabong shed more than half their value in December after the company revealed first-half profit may fall as much as 26 per cent. And JB Hi-Fi stock, also listed on the ASX, took a big tumble after the electronics retailer issued a pre-Christmas downgrade.
Kathmandu shares, which have gained more than 20 per cent since late January, closed at $1.88 last night.