Kathmandu will slow down its Australian retail rollout following a shock result for the half year.
The Christchurch-based retailer posted a loss of $NZ1.8 million in the six months ended January 31.
This followed a profit of $NZ11.4 million a year earlier.
The result is in line with the company's February forecast for a loss of $NZ1 million to $NZ2 million.
While sales climbed seven per cent to $NZ179.4 million, costs soared 18 per cent to $NZ99.5 million.
Lower-than-expected sales meant costs as a percentage of sales increased to 55.5 per cent from 50.4 per cent a year earlier.
Acting CEO Mark Todd said there were a number of contributing factors to the result.
"The aggressive quitting of excess stock in August and September dr ve top line sales but at significantly reduced gross margins.
"This brought forward some customer purchases th t would otherwise have been made at higher margins later in the half.
"Most importantly our Christ as sale and trading through January did not produce the sales we expected."
Todd noted weak conditions in the Australian market as a key driver.
"As with every year, the full y ear result is highly dependent on the sales and gross profit margin performance we achieve in the Easter and Winter sales periods.
"We have prepared carefully for these sales, incorporating what we learned from the first half.
"Promotional activity has been modified and we are even more focused on delivering benefits to our 1.2 million Summit Club members.
"Trading in the first week of Easter sale was soft in Australia, but satisfactory in NZ."