Adventure apparel retailer Kathmandu has announced a 36.2 per cent drop in earnings before interest and tax to $12.7 million (AU$9.9 million) for the first half of the 2012 financial year.
Despite a 15.4 per cent rise in sales to $146.7 million (AU$114.5 million), the New Zealand-based retailer also suffered a decline of net profit after tax to $6 million (AU$4.67 million) for the six months ended January 31, down from $10.5 million (AU$8.18 million) in 2011.
Same store sales, however, increased by eight per cent and online sales growth were up over 50 per cent on the same period last year.
However, Kathmandu Holdings Limited CEO, Peter Halkett said that while sales over the period were “very strong”, this was achieved at lower gross margins and incurred higher costs.
“Following slow Christmas trading, more aggressive promotional and marketing activity was undertaken during January to maximise profits and rate of inventory sell-through,” he said.
“Additionally, net profit was impacted by one-off costs associated with our core system upgrade and brand refresh project.”
Going forward Halkett said the company will continue to invest in its store network through opening new stores and relocating of refurbishing existing stores.
Kathmandu now expects to open between 11 to 15 new permanent stores in the full financial year, with new Australian permanent store locations set to include Tamworth, Shell Harbour and The Rocks, Sydney in New South Wales and Moorabbin DFO in Melbourne, Victoria. These sites are expected to open for trading before July 31, 2012, with another two or three sites currently under negotiation.
Halkett said Kathmandu would be unable to provide specific full year guidance at this stage, but said the retailer would be exposed to a few key risks which could affect future results.
“Kathmandu's annual trading pattern means the overall result for the year depends primarily upon the second half year performance and in particular the winter sale. Sales improvement in the period post-Christmas has continued since the end of January, but two of our three largest promotional events of the year are still to come, which impact the possible range for the full year result,” he said.
“Given the difficult current market conditions, we do not believe it is possible to provide specific guidance.”