KMD Descends from Peak with Sales Slump Across the Board

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By Published On: February 20, 20240 Comments

KMD Brands have revealed sales are down by double digits in the first half following a record breaking 2023.

KMD Brands, the New Zealand based parent company of Kathmandu, Rip Curl and Oboz, has revealed in a preliminary update that 1H FY24 group sales are expected to be approximately $469 million NZD (approx $440m AUD), 14.5 percent below last year. According to KMD Brands, the results reflect an ongoing weakness in consumer sentiment.

Last year, the company reported a record breaking $1.1 billion sales in FY23. 

KMD Brands’ golden child Kathmandu has fallen from grace in 1H FY24, with sales down 21.5 percent. Footwear brand Oboz has similarly slipped 20 percent during the half. Rip Curl didn’t suffer as much likely due to summer demand, but sales still dropped 9.2 percent year on year. 

“It has been a challenging start to the year, as consumer sentiment continued to weaken”, comments Group CEO & Managing Director Michael Daly. “Rip Curl and Oboz are cycling record sales last financial year, and while revenues from the direct-to-consumer channel for these brands are showing single digit declines (-4.4 percent), the wholesale channel has been more challenging (-16.8 percent) as wholesale accounts reduce inventory holdings. We expect this inventory reduction cycle to end this financial year giving us a more positive FY25 outlook in the wholesale channel.”

“Kathmandu has experienced softer trading results since June 2023. A combination of weaker consumer sentiment, the warmest winter on record in Australia and the brand’s reliance on winter weight product has resulted in a disappointing first half. We expect to see signs of improvement in the second half and into FY25 as we launch new innovative products, quick to market programmes, elevated visual merchandising, increased personalisation through the recently released “Out There Rewards” and an expanded third-party brand strategy. Improvement in Kathmandu’s sales performance remains an immediate priority as we approach the key winter trading period.”

The update also revealed operating costs are $16 million below last year, despite continued inflationary pressures and Group inventory at 31 January 2024 is $5 million lower than last January, with net working capital $18 million lower than last January despite lower sales. 

Group underlying EBITDA for the half is expected to be in the range of $14 million to $16 million.

“The whole KMD Brands team is focused on delivering sales improvement, optimising gross margin, controlling operating costs and reducing working capital,” concluded Daly.

The Group will release its final first half results in more detail next month. 

About the Author: Rosalea Catterson

Rosalea is the Editor of Power Retail. With a keen interest in consumer behaviour and tech, she covers everything ecommerce and hosts the Power Retail Power Talks Podcast.

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