KMD Brands delivers record $1.1 billion sales in FY23

As predicted by the group back in July, KMD Brands delivered on its record breaking $1.1 billion sales in FY23. 

In July, KMD Brands, the parent company of Kathmandu, Rip Curl and Oboz, released a trading update and guidance for the full year ending 31 July. With three weeks to go, the company had confidence it would reach a record high for KMD Brands at expected $1.1 billion in sales which it met. 

In the FY23 results released last week, the company confirmed the group didn’t only hit that milestone, but all brands experienced impressive growth, with Rip Curl and Oboz achieving record sales.

Group sales grew 12.6 percent on 2022. Gross margin improved an impressive 20 basis points to 59.1 percent. The group finished the financial year with an underlying EBITDA of $105.9 million, which was up 15.1 percent YoY despite softening consumer sentiment in the fourth quarter. The fourth quarter saw a warmer winter across key markets as well as cost of living concerns which all affected consumer spending. 

The group experienced strong omnichannel sales growth from all brands. Customers returned to shopping in stores, with retail store sales increasing 17.5 percent. This had an impact on online sales, but despite this, Group wholesale sales grew by 11 percent. 

“KMD Brands has achieved record sales of over $1.1 billion dollars in our first year of uninterrupted trade post-pandemic, a significant milestone for the Group,” Group CEO & Managing Director Michael Daly said. “Strong sales growth was delivered across all key geographies, with Rip Curl and Oboz achieving record sales. Kathmandu sales grew strongly over the first three quarters of the year. The fourth quarter for Kathmandu was more challenging with increased cost-of-living pressures softening consumer sentiment, and the warmest winter on record in Australia, which cycled the best-ever winter trade season last year.” 

Rip Curl was the stand out performer of the brands. It achieved a record sales result, with total sales up 8.3 percent to $581.5 million. According to KMD Brands, the results were underpinned by strong direct-to-consumer results particularly in Australasia following lockdowns last year, plus the return of international travel to Hawaii and Thailand. 

With Kathmandu recently announcing a revamp of its loyalty program, the group seems to be doubling down on its loyalty strategies. Club Rip Curl launched at the start of FY22, and the customer loyalty platform had over 220,000 users by the end of the financial year and has driven over $30 million in member-based sales.

The Group also highlighted its ESG achievements in FY23. Commenting on the Group’s sustainability initiatives, Mr Daly said, “leading in ESG is a core component of our strategy, and I’m pleased to say we achieved a lot this year. A highlight for me, and the Group at large, was certifying as a B Corp. All of the Group, brands and employees the world over, united to make this happen. It was a very proud moment.” 

 “In addition to what we achieved at a Group level; our iconic brands also delivered true leadership in this space. Rip Curl launched its first Reconciliation Action Plan (RAP) in partnership with Reconciliation Australia; Oboz’s long running ‘One More Tree’ initiative to plant trees on behalf of customers reached a milestone of over 5 million trees planted since it began in 2007; and Kathmandu launched a pilot circularity project ‘KathmanREDU’, supported by a grant from the Victorian Government, which aims to commercialise a complex non-linear new business model, the first of its kind in ANZ.”

Mr Daly concluded that KMD Brands is well positioned as the company begins FY24 with a healthy balance sheet with low net debt and improving inventory levels.