Kathmandu sales up 19.5%, but Christmas the key to 1H earnings
Outdoor equipment retailer Kathmandu says first-quarter sales rose more than expected, though growth in first-half profit hinges on a successful Christmas and New Year. The shares climbed 4.1%.
Sales rose 19.5% to $66.9 million in the 15 weeks ended November 11, while at stores open at least 12 months they gained 14.3%, the company says in presentations for its annual meeting today.
"Trading to date gives us confidence and is ahead of our YTD targets, but earnings growth is still almost all expected in 2H FY13. Providing there is no further deterioration in economic conditions, Kathmandu continues to expect an improvement in performance of our business in FY13 over FY12."
Shares rose 7 cents to $1.80 and have declined 2.3% this year. They are rated "outperform" based on 10 recommendations compiled by Reuters. At today's price the stock has a dividend yield of 8.78%, more than twice the average return on a one-year term deposit, according to interest.co.nz.
"Despite the difficult retail trading conditions, our sales performance in the first 15 weeks of the financial year has overall been ahead of our expectations, particularly in Australia," chief executive Peter Halkett says.
"Growth in first-half profit remains highly dependent on the Christmas and January trading period."
The retailer has opened six new stores in Australia in the latest period and aims to have three more open before Christmas. The target for full-year 2013 is 15 new stores.
Chairman James Strong told shareholders economic prospects both globally and in Australasia "have to be viewed with caution".
Still, "there is no change to our view that the Kathmandu brand has genuine potential to be a significant global presence in the outdoor travel and adventure market", he says.
"We are very clear that in the short term our key strategy remains to invest and grow the business and build the Kathmandu brand in the Australasian market."