Outdoor clothing and equipment retailer Kathmandu says same-store sales during the past four months were up 2.1 per cent on the same period last year but warns the retail market remains volatile.

At its annual meeting it said it had total sales of $51.6 million in the period, which was 9.3 per cent up on the corresponding period last year.

The company, which listed on the NZX and ASX a year ago, aims to open 15 new stores in Australasia this financial year. At present Kathmandu has 55 stores in New Zealand and 36 in Australia and the company is building towards a total of 150.

Chief financial officer Mark Todd said it was under-represented in Queensland and Western Australia.

Chief executive Peter Halkett said an expanding product range had been and would continue to be a growth driver. The company planned to expand its range by 30 per cent during the next three years.

He said retail conditions had continued to be challenging during the financial year but despite this trading performance had been reasonable.

The three main sales periods - winter, Christmas and Easter - remained critical to annual trading and accounted for more than 60 per cent of sales for the 2010 financial year.

The company aimed to maintain gross margins of between 62 per cent and 64 per cent, Halkett said.

"Given trading conditions, our sales performance in the first 16 weeks of the financial year is reasonable. Sales momentum has been steady and we have maintained gross margins."

Kathmandu successfully launched online selling in October last year and trading had been above expectations in both New Zealand and Australia.

Halkett said there was "much uncertainty and volatility" in the economic and retail environment. Discretionary retail spending remained under pressure, he said.

Given no further deterioration in trading conditions, the company believed the business would continue to grow profitability in the year ahead.

Chairman James Strong said the company expected to continue to adopt a dividend payout ratio of about 55 per cent of tax-paid profit in the medium term.

The economic environment would continue to adversely affect overall consumer spending in at least the short term, Strong said.

"Despite these circumstances and the disappointing current share price, Kathmandu's continuing market leadership, brand positioning and value proposition, which is underpinned by its vertical integrated business model, will continue to provide strategic competitive advantage and resilience to deal with any extended market downturn," he said.

Kathmandu shares - which were $2.13 when the company listed - closed up 1c yesterday at $1.56.

* Kathmandu sales up in four months to November 21.
* 15 new Australasian stores planned.
* Online sales above expectations.