UPDATE: Kathmandu shares soar as retailer delivers record earnings, upbeat outlook
Kathmandu Holdings [NZX: KMD] shares soared to an all-time high after the outdoor equipment and clothing retailer posted record annual earnings and gave an upbeat outlook, reassuring investors after a year of changeable weather.
The stock jumped about 12 percent to $3.18 and traded as high as $3.22, the highest since the company listed in late 2009. Before today, analysts polled by Reuters had an average hold rating on the stock and a median price target of $2.75.
Net profit rose 27 percent to $44.2 million in the 12 months ended July 31, the Christchurch-based company said today. Sales climbed 11 percent to $384 million, outpacing a 9.8 percent rise in operating expenses to $168 million.
"If you look at the weather we've had over the last few months, there's been encouraging periods and very disappointing periods," said Mark Warminger, a fund manager at Milford Asset Management. "There were some expectations the results could have been a little bit light."
Kathmandu stood out as one of the cheapest retail stocks in Australasia and had probably risen to fair value with today's surge, he said. "It has looked incredibly cheap."
The company plans to open 15 new stores in 2014, adding to its 136 stores in New Zealand, Australia and the UK. It plans to expand to 170 stores in its main markets of Australia and New Zealand, from 131 currently, the company said today.
"Providing there is no deterioration in economic conditions, Kathmandu expects another solid performance in FY2014," chief executive Peter Halkett said in the statement.
In Australia, which accounts for two thirds of sales, Kathmandu boosted revenue 20 percent to $241 million in 2013 as it added 14 new stores. In New Zealand, which makes up about 36 percent of sales, revenue rose 8.6 percent to $137 million after it added two new stores.
In the UK unit, which is being reorganised, sales dropped 12 percent to $5.9 million as it added one new store and closed two stores. The UK profit margin fell by 200 basis points as the company cut prices to clear stock as a result of the store closures, it said.
Kathmandu plans to increase its online sales, which grew 55 percent in 2013 to account for more than 4 percent of total group sales.
The company will pay a final dividend of 9 cents a share to be paid on Nov. 22.