Kathmandu, Rip Curl owner KMD Brands flags first-half earnings slump

KMD Brands has flagged a slide in first-half earnings despite improving trading conditions at its outdoor clothing brand Kathmandu and surfwear label Rip Curl at the end of 2024.

The dual-listed group — which is also behind hiking boots brand Oboz — expects underlying earnings for the first-half to be in the range of $NZ1 million ($903,295) to $NZ3m, down from $NZ15.1m a year ago.

But KMD Brands in a trading update provided to the market on Friday also revealed its key brands Kathmandu and Rip Curl have booked positive sales growth at the end of last year.

Sales between November and December grew 2.2 per cent for Rip Curl, compared with a 6.7 per cent decline recorded in the three months to October.

For Kathmandu, sales were up 1.7 per cent between November and December, an improvement from the 2.7 per cent fall it reported between August and October. At Oboz, sales declined 5.1 per cent in the second quarter.

Total group sales in the two months to December also lifted 1.7 per cent, compared with the 5.8 per cent slump recorded in first quarter. Outgoing chief executive Michael Daly said this result was driven by improving trends in the direct-to-consumer channel for all three brands.

However, wholesale sales were taking longer to recover and continued to decline year-on-year.

“Rip Curl and Kathmandu gross margins remain resilient year-to-date despite increased promotional intensity and a tough trading environment,” the company said.

“While Oboz clearance of inventory has contributed to lower gross margins year-on-year.”

Total group sales are down 2.5 per cent in the five months to the end of December.

KMD Brands shares are up 1.9 per cent to 38¢ just before 11am on Friday.

The trading update from KMD Brands came the same day online electronics and furniture retailer Kogan reported a 9.9 per cent increase in half-year revenue to $272.7m, with gross profit up 18.3 per cent to $106m.

While adjusted earnings rose 21.2 per cent to $19m, Citi’s James Wang said it represented a 7 per cent miss to consensus expectations.

“The key negative for us is the decline in adjusted EBITDA during the Black Friday and Christmas sales period. Revenue grew but EBITDA fell,” he said.

The earnings miss sent shares down 12.5 per cent to $5.23 just before lunchtime on Friday.

Kogan said it had undertaken a digital transformation for its NZ online retailing business Mighty Ape, which went live in October.

“However, implementation and technology challenges temporarily adversely impacted Mighty Ape sales and profitability during the peak period,” it said.

“These issues have since been largely resolved, and the new unified platform is expected to deliver significant long-term benefits.”

The earnings miss sent shares down 12.5 per cent to $5.23 just before lunchtime on Friday.