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Rip Curl Drives Sales and Profits for Kathmandu in HY FY21
Rip Curl’s growth has helped balance the loss of sales experienced by Kathmandu, which was impacted by COVID-related issues, including store closures and travel restrictions.
Rip Curl has driven strong sales and profits for Kathmandu in its half-year results for FY21. With an increase in surfing and beach-related activities, the global footprint for the retailer has increased and delivered ‘strong sales growth’.
There were ‘multiple headwinds’ that prevented sales growth, The Group has reported. Throughout the span of the pandemic, 60 Greater Melbourne stores remained closed for 11 weeks, with 14 Auckland stores also shutting for two weeks. This is a driving catalyst for the dip in total sales, the Group has reported.
The Group’s online penetration has increased from 8.8 percent to 12.7 percent and has recorded growth in Gross Sales of 12.9 percent to $410.7 million, including a full six-month contribution from Rip Curl.
“Despite operating in challenging conditions over the first half due to the substantial impacts from COVID-19, Rip Curl delivered an outstanding first-half result, validating the Group’s diversification strategy,” explained Xavier Simonet, the Group CEO.
Simonet cited that Rip Curls’ ‘strong consumer engagement’ and ‘technical product focus’ has helped balance the restrictions that COVID put on the business. Furthermore, its wholesale order book is performing at pre-pandemic levels, he said.
“Benefitting from increased participation in surfing in Australia, Europe and the USA, Rip Curl achieved strong sales and profits despite COVID-19 trading restrictions, reflecting the brand’s technical product focus and strong consumer engagement,” he explained in the HY update.
“Pleasingly, Rip Curl’s wholesale order book is back above pre-COVID levels.”
Rip Curl has recorded an 86.1 percent uplift in sales to NZ$251.1 million, with Gross Profit increasing by 86.3 percent to NZ$150.3 million. Global sales were 4.3 percent below the comparable six-month period last year, The Group reported.
“Over the first half, we implemented a rapid response to changes in consumer preference resulting from COVID-19,” said Simonet. “To respond to increased participation in local travel and adventure, our brands adjusted their focus to product categories in high demand, such as wetsuits and surfboards for Rip Curl, and camping and footwear for Kathmandu.
“Omni-channel capability allowed our brands to capture record demand for the online channel, with online penetration now making up almost 13 percent of the Group’s direct to consumer sales,” he said.
The Group has made sustainable practices a focal point, the Group CEO explained. “We’ve made carbon neutrality a priority, because the planet comes first,” he said.
The retailer has successfully reached its goal of being carbon neutral, with Simomey stating that it is now four years ahead of its original schedule.
“During the first half, the Kathmandu brand reached its goal of being carbon neutral. Achieving this milestone four years ahead of schedule is something we’re very proud of.”
For the next few months, the retailer plans to focus its intentions across Australasia as it enters the winter season.
“Whilst navigating the ongoing impacts from COVID-19, our long-term strategy remains unchanged,” said Simonet.
“During the second half, we are focussed on the strong execution of Kathmandu’s winter season in Australasia. We will also see the benefits from synergies and cost-out initiatives across the Group, which we expect to deliver around $15 million of our annual savings in FY21.”
The retailer has also reported a ‘well placed’ inventory, in a COVID-19 demand environment, with low clearance stock levels.
Kathmandu Group has closed its HY results with a ‘robust’ balance sheet, with a $10.1 million net debt, reflecting working capital management strategies. Subject to normal trading conditions, the retailer said it could be expected to be in a positive net cash position by the year’s end.