Kathmandu to make share placement to fund US acquisition

The company has bought a US footwear retailer.

Kathmandu is raising up to $15 million from retail shareholders and $40m from institutional shareholders to help fund its acquisition of US footwear company Oboz Footwear LLC.

The Christchurch-based company says it has acquired US-based Oboz Footwear for a base cash consideration of $US60 million and earn-out of up to $US15 million.

It plans to raise $40 million from institutional shareholders in an offer fully underwritten by Goldman Sachs and up to $10 million from retail shareholders at an offer price of $2.16 a share, a 10% discount on the company's $2.40 share price at close of trading yesterday.  The balance of the purchase price will be funded from a new acquisition debt facility and expansion to existing debt facilities.

Oboz designs, sources and sells backpacking and hiking footwear, and distributes its products directly to North American outdoor and sporting retailers, and some online sellers.

“This is a significant event for the company, accelerating our international growth, and diversifying our product mix, geography and channels to market,” Mr Simonet says.

Improving sales
The outdoor equipment retailer's latest results out today show first-half sales were $204.8 million in the six months to January 31, up 4.3% on the same period a year earlier.

Earnings before interest and tax increased 22% to $18m while net profit after tax increased 23% to $12.3m.

The company had signalled in January it expected net profit would be at least $12 million in the first half against $10 million in the first half of the 2017 financial year.

Kathmandu’s sales were up 3.7% in Australia, its largest market. New Zealand sales were down 6.4%, impacted by lower levels of clearance stock. Online sales now comprise 8% of group sales.

Healthy group first-half earnings growth was achieved by striking the right balance between generating sales and improving gross margin, and sales momentum has continued into February and March, chief executive Xavier Simonet says.

“Our financial position continued to strengthen during the first half year and we ended the period with healthy inventory and record low half-year net debt.”

Net debt was $17m at the end of the January, down from $49m a year earlier.

The board announced an interim dividend of 4c a share.

More to come.

1 comment
Login in or Register to view & post comments