KMD Brands has reported a 0.5 per cent slip in overall sales across its three brands in FY25 to May 25, with Kathmandu pulling down on growth in the second half.
The key reason for the outdoor wear brand’s sales slip, according to KMD, is unseasonably warm weather in Australia, which had a “material adverse impact” on Kathmandu’s insulation product category.
This was offset by sales growth year-on-year in other key product categories such as rainwear, fleece, knits, and footwear.
However, a recent change to cooler weather in both New Zealand and Australia in June has reignited sales momentum, with the first 17 days of June delivering a 13.2 per cent sales growth year-on-year. KMD Brands reported that school holidays and the start of the ski season offer further opportunities to continue the momentum for the remainder of the financial year.
Total sales for Kathmandu in the second half to May 25 slipped 6.4 per cent, with its sister brand Rip Curl reporting a 0.9 per cent uplift in the same period. Oboz Footwear, KMD’s smaller footwear subsidiary, report a 1.1 per cent fall in sales.
Kathmandu’s fall in the second half followed a 3 per cent lift in sales for the first half of FY25.
“While the volatility of Kathmandu’s sales performance is frustrating, we acknowledge that unseasonably warm weather in Australia, including Victoria’s warmest Autumn on record, has negatively impacted sales,” KMD Brands CEO and managing director Brent Scrimshaw said.
“Kathmandu’s significant sales improvement, including strong online momentum in recent weeks, reinforces our enduring brand health and strengthens our confidence in the future growth opportunity.”
Scrimshaw added that the group is proactively working on a range of initiatives to unlock future growth opportunities across the portfolio, address short-term market challenges and improve medium to long-term performance and value for shareholders.
He and the team expect to update the market on these initiatives at their investor day in September.
Meanwhile, Rip Curl’s global direct-to-consumer sales have continued to grow year-on-year through the second half of FY25 to May 25, with KMD reporting strong comparable sales results in North American flagship stores.
However, the company reported that while wholesale trends continued to improve from the first half, wholesale sales remained below last year through the second half to date.
Wholesale sales also impacted Oboz, which is its main key channel, but trends improved from the first half with the launch of new season styles ahead of the North American summer hiking season.
KMD added that Oboz online sales have been variable since the announcement of global tariffs by the United States, but remain above last year in year-to-date terms.
The group also noted that total online sales across the brands were up 10.7 per cent year-on-year in year-to-date terms.
Kathmandu recently upgraded its online trading platform, with KMD reporting a significant improvement to the consumer journey.
“Since implementation in May,” KMD noted, “online sales have been up 26.1 per cent above last year, with the recent Australian public holiday being the highest online sales day for over two years.
The group will be rolling out the new online trading platform to both Rip Curl and Oboz later this year.
KMD Brands’ trading update also covered the “fluid” US tariff situation, with the group noting that it remains too early to estimate the impact on consumer demand in the US.
KMD anticipates tariffs to impact FY25 EBITDA by approximately $1 million. With Kathmandu winter trade continuing and the Rip Curl summer trade in the US and Europe commencing, the group expects FY25 underlying EBITDA to be in the range of $15 million to $25 million, with material trade to come.
Matching the slip in sales, alongside a 140 basis point slip in group gross margin, KMD now expects net debt at July 31 2025, to be approximately $70 million, with direct-to-consumer sales performance the key cashflow driver for the remainder of the financial year.
“All brands continue to actively manage working capital and expect inventory to be lower than FY24,” the group reported. “Group inventory commitments for FY26 continue to be strategically moderated, along with targeted clearance of end-of-line styles for the remainder of the financial year.”