Kathmandu half-year net profit $10.5m
New Zealand-based outdoor clothing company Kathmandu has announced it was able to make strong gains in half-year sales and earnings, despite being a “young” business and during a hard time for the retail industry generally.
The company has reported half-year earnings before interest and tax up 28.4% from a year earlier at $19.9 million, with revenue up 19.2% to $127.1 million.
Net profit for the six months to January 31, 2011, was $10.5 million, with same store sales growth of 12.1% which equated to 9.5% at constant exchange rates.
In New Zealand, sales were up 12.4% to $48.1 million, with growth of 20.8% in Australia to $74.4 million, while in the UK they declined 0.9% to $4.6 million. Same stores sales were up 6.5% in New Zealand, up 12.4% in Australia, and down 1.3% in the UK.
Kathmandu chief executive Peter Halkett said that since the company’s initial public offer in late 2009, it had increased its product range across its network, which increased by 18 stores to 100.
The gross profit margin improved to 64.7% in the latest period from 61.3% a year earlier.
That improvement was mainly due to lifting selected prices as necessary as the price of goods produced in China rose, Mr Halkett said. Product mix was also important.
“The more apparel and woven lines we sell, the higher our overall margin goes.
“The market overall is quite a strong headwind for us. There’s no doubt it’s very difficult and we’ve never had to work harder in the history of Kathmandu, but against that is that we have some good strategies that are proving successful, that are offsetting what would otherwise be very challenging,” Mr Halkett said.
Kathmandu is continuing to increase store numbers, and will hit its target of 15 new stores this financial year.
It had already refurbished and relocated many central stores, with good results and the process could be accelerated, Mr Halkett said.
“Our first half performance and continued store rollout provides confidence that an improvement in both our second half performance and our overall year-on-year profitability can be achieved.”
Despite that outlook, Mr Halkett noted the apparel industry faced significant cost increases from cotton and other materials as well as labour rates in Chinese factories.
Various ways were available to deal with that, with overall prices at the manufacture level possibly going up 10% or more, while at the retail level the rise would be generally 2-3%.
