Kathmandu appeals to investors after profit slump
New Zealand-based outdoor retailer Kathmandu has appealed to investors and analysts to await a stronger second half – when most of its sales and profits are booked – after a worse than expected decrease in first-half profits.
Kathmandu recently reported first-half profit for the half-year to January 31, 2012, had decreased by 43.1% to $NZ5.98 million (US$4.8 million). Revenue grew 15.4% to $NZ146.7 million (US$118.6 million) but the sales rise was spoiled by $NZ4 million (US$3.2 million) in costs associated with systems upgrades and rebranding and intense competition that forced the retailer to heavily discount its products.
Margins were reduced across all three countries where Kathmandu has its stores (Australia, New Zealand and the UK) as it was dragged into a price war that made it heavily promote and discount its products.
Chief executive Peter Halkett said the group’s overall profit result for the full year remained primarily dependent on second-half trading, which in 2010-11 contributed almost 70% of total profit.
He said the $NZ4 million in costs in the first half would not be repeated this half. But he expected the tough competition in retail to continue.
“As Kathmandu continues to roll out more stores, the weighting of our earnings towards second-half trading is expected to increase due to two of our three major sale events occurring in the second half,” he said.
“A number of actions have been initiated to recover the sales shortfall over the Christmas trading period and, subject to second-half trading, full-year profit growth remains achievable.”
