While many local retailers have reported a relatively subdued Christmas sales period, Kathamndu may be bucking that trend when it releases its first results as a listed company tomorrow.
The Warehouse – the country’s biggest retailer – last week reported flat sales over the crucial holiday period, suggesting that many retailers were finding the road to recovery more rocky than expected.
But figures from Statistics New Zealand – also released last week – show that Kathmandu might be in a good position to capitalise on increasing consumer confidence, with spending on recreational goods showing the most improvement in January amongst all retail categories with a 4.8% rise.
Sales of recreational goods have been rising steadily since August 2008, up 8.1% since that time.
While Kathmandu does operate in a competitive market, its has shown a strong track record and has spent the past few years expanding its retail footprint, doubling its number of stores over the past five years.
The company took the leap into the public world with its November listing on the NZX, soon joining the NZX 50.
Originally priced at $2.22, the share price did dip over the next few months to a low of $1.90, but has since recovered to hover at the same level it started out at.
In the prospectus issued to support the IPO, the company forecast an 11.3% increase in sales for the full 2009 year to $240 million, while also predicting a full year net profit after tax of $30.9 million.
In a research note released this week, First NZ Capital analyst Sarndra Urlich said the retailer’s first half sales should exceed expectations with a 57.2% increase in ebitda, while net profit should be about $7.3 million.
But she also pointed out that the key reference point in tomorrow’s results will be the trading trends seen so far in the second half of the year.
The second half is the company’s most important period of the year, with two of its three key sales promotion periods falling in the latter half.
In her initial note on the company, released last month, Ms Urlich said Kathmandu was not immune to the same problems facing other retailers, such as cannibalisation, competition and the economy and was forecasting a decline in same store sales port the 2011 year.
“That being said, assuming Kathmandu continues to get traction with its store rollout, this should outweigh most negative influences.”
Robert Smith
Wed, 17 Mar 2010