AUCKLAND: Kathmandu expects earnings to fall short of its 2009/10 prospectus forecast, despite a lift in consolidated sales figures.
The outdoorwear retailer has reported it expects earnings before interest and tax (EBIT) for the 2009/10 financial year to be between NZ$47 million and NZ $48 million, excluding costs associated with its initial public offering.
This figure is five to seven per cent below the company's forecast EBIT of NZ$50.6 million.
Kathmandu said there were three key reasons for the earnings shortfall, namely a challenging retail environment, deteriorating margins and an increased spend on advertising.
Kathmandu CEO Peter Halkett said the company was pleased to have exceeded its 2008/09 EBIT figure of NZ$44.1 million.
“Throughout the final four months of the financial year, in all three countries that Kathmandu trades in, the retail environment has been very challenging, and more difficult than we experienced in the first half of FY2010,” Halkett said.
“Given the retail market conditions and a clear downturn in consumer spending we believe the level of promotional activity and our pricing strategies have been the right response for our business.”
Kathmandu reported consolidated sales for the year ending July 31 2010 were NZ$245.5 million, up 13.9 per cent on the previous year.
Sales in Australia were up 14.3 per cent, New Zealand up 10.6 per cent, and in the UK up 18.6 per cent compared to 2008/09.
The company opened 14 permanent new stores in the 2009/10 period, up from its forecast 12 store openings.