Digital Channels Drive Kathmandu Profit Upgrade

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By Published On: June 25, 20180 Comments

Kathmandu has issued a profit upgrade, claiming net revenue for the financial year will fall in the range of $48-52 million, up from $38 million last year.

Kathmandu has announced a substantial profit upgrade for its 2018 accounts, on the back of a 7.7 percent surge in year-to-date sales. The businesses gross profit margin is also up 2.4 percent from the previous year.

Earnings before interest and tax are forecast to reach $72–77 million, an increase of $15-$18 million from 2017.

According to Xavier Simonet, Kathmandu’s chief executive, the strong second-half sales have been consistent across both the New Zealand and Australian markets.

“The autumn season and the start of our key winter promotion have delivered higher sales and profit than planned,” Simonet said.

“The successful launch of innovative new products, enhanced in-store customer experience, inspiring content and engagement on social media and digital channels, has contributed to performance.”

In the six months ending in January, the outdoor goods and apparel retailer posted a 23 percent rise in profits to $NZ12.3 million; an increase of 4.3 percent. This positive sales momentum seems to have continued through 2018, with sales in the six weeks leading up to March 11 also closing 7.9 percent higher than last year. This represents a same-store growth of 5.1 percent in New Zealand, and a strong 7.5 percent across its Australian operations.

The company also announced its commitment to protecting workers’ rights, claiming it wants to improve worldwide labour standards in its factories. As such, Kathmandu has reportedly become the first business from the southern hemisphere to join the Fair Labour Association (FLA).

According to the FLA website, the non-profit alliance was founded in 1999 by Bill Clinton, and is dedicated to protecting workers’ rights across the globe. This is an issue that Simonet claims is in-line with Kathmandu’s values.

“Human rights is our number one material issue reflecting the very heart of Kathmandu’s values and brand,” Simonet said in a statement on the company’s website.

As a group member, Kathmandu will need to submit independent audits of its manufacturing process to ensure it meets FLA standards, which the AAP claims are among the toughest in the world.

After news of the profit upgrade and workers’ rights focus broke, Kathmandu’s shares rose eight percent to $2.70, settling at $2.66 later in the day. The company’s annual 2018 results are expected to drop in September, after the close of the financial year.

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Heather Bone