Retailer sees signs of improvement in second quarter.
NZX and ASX-listed apparel retailer and wholesaler Kathmandu has released a trading update confirming the heavy impact of Covid-19 on its first half with 11,696 trading days lost due to pandemic controls.
Group sales for the six months to January would be $405 million, it said, compared to $410.7m in the previous corresponding period.
However, it said underlying ebitda for the half would be $9-11m, down from $48m a year earlier, representing a Covid-related profit impact of $35m.
“Covid continues to cause ongoing disruption to our consumers, employees and suppliers globally, most recently from the Omicron variant,” said chief executive Michael Daly.
“The disruption has resulted in reduced retail footfall, temporary store closures and staffing constraints in many locations. Sales conversion has increased as customers have shopped with purpose, and our online channels continue to grow.”
The company said trading days lost due to Covid restrictions were up 65% on the same period a year earlier, although there were signs of improving profitability in the second quarter.
Sales at the group’s Kathmandu outdoor equipment stores were up 2.8% on a same-store basis with a particular improvement seen in the second quarter.
However, same-store sales were still 21.1% down on the pre-Covid first half of 2020.
Same-store sales at the Rip Curl surfwear chain, acquired in 2019, were down 1.6% compared to the first half a year ago, although the second quarter again showed signs of growth.
The brand benefited from growing interest in surfing internationally, bolstered by the inclusion in the 2021 summer Olympics, and research expects the global market to reach $3.1 billion by 2026.
“It was pleasing to see a strong rebound in Kathmandu sales over the second quarter of FY22 following the first quarter’s lockdowns,” said Daly.
“Kathmandu is well placed with appropriate inventory levels and new product introductions for the second half. Rip Curl has again performed well in the southern hemisphere summer season, with strong wholesale sales growth, and retail sales consolidating last year’s strong growth and profitability.”
Group wholesale sales for the half are expected to be 3.4% above the previous year.
The market announcement reiterated its Oboz footwear business had suffered from factory shutdowns in Vietnam in the first quarter, with 50% of Oboz orders unable to be completed.
However, a recovery was expected in the second half, it said.
“Demand for the Oboz brand and products has never been stronger, and forward orders into FY23 still support the medium-term revenue growth targets.”
The company said net debt at balance date was expected to be $48m.
Kathmandu plans to release the full result for the half-year on Wednesday March 23.
