KMD Brands has grown it's overall sales by 6.2% to $979.8 million despite a 12.2% rise in its operating expenses.
According to the Group’s FY22 report, the operating expenses reflect higher wage and rent costs relative to sales, with elevated costs in international freight and raw materials.
The Kathmandu parent company also “upweighted” investment in brand marketing and ESG to drive future brand growth - up $18.6 million increase YOY.
Speaking on the results, Group CEO and MD Michael Daly said the 6.2% growth in overall sales is a record for KMD brands.
“KMD Brands continued to deliver strong results over the past 12 months while navigating substantial COVID challenges in the first half,” Daly said.
“The strength of our brands was evident in record Group sales of nearly $980 million, with a strong return to sales growth across all of our brands in the final quarter.
“In addition, we made significant progress across each of our strategic pillars to build global brands, elevate our digital presence, leverage our operational excellence, and be a leader in ESG.”
The report noted that these results were “underpinned” by sales growth in Rip Curl and Kathmandu.
Rip Curl saw a 9.5% growth in sales over FY22 to $536.8 million. Daly said the growth was particularly strong in Europe, Hawaii and South-East Asia.
“Rip Curl achieved sales growth across all channels and key international regions… as we continued to invest in the long-term value of the brand,” Daly noted.
“Rip Curl’s wholesale order books remain significantly above pre-COVID levels, allowing us to better manage supply chain disruption through near-term inventory investment.”
Wholesale sales were up 16.5% with less Covid-19 disruptions to the 1H FY22 sell-in period, and continued strong growth in 2H.
According to the report, the wholesale channel is showing a similar level of sales to the retail store channel.
Its direct-to-consumer (DTC) channel, in both its retail stores and online, generated same store sales growth of 3.9%.
Moving to Kathmandu, the brand experienced saw a whirlwind winter season, with both Q4 sales and gross margin above FY19. This was despite lockdown strains in the Q1.
Full year EBITDA reduced slightly, with profitability rebounding in 2H. Kathmandu achieved the highest-ever 2H gross margin result.
Total sales for the outdoor-wear brand were up 6.8% to $381.6 million, seeing a healthy rebound after lockdowns.
During the financial year, Kathmandu’s wholesale channel strategy was launched, with encouraging early wholesale orders taken from a select number of retailers in Europe and Canada.
DTC same store sales growth was up 9.1%, which accounts for nearly all of Kathmandu sales, according to the report.
The brand also saw a 24.9% growth in online sales, now representing 18.7% of total sales. The report stated that this result was supported by continued investment in the long-term value of the brand and an embedded loyalty base of close to 2 million members.
The report also stated that raw material and international freight cost pressure was “more than offset by currency benefit and the deliberate strategy to carefully moderate the historic ‘high-low’ pricing model.”
“With the effects of COVID now largely behind us and international travel returning, we are very focused on executing our growth strategy,” Daly said. “[This will be] through expanding our global footprint, investing in digital platforms, leveraging operational excellence, and leading the industry through sustainability and innovation.”
Beyond
According to Daly, the momentum from Q4 results has continued. August sales for the Group were up 44.2% on August 2021, and 10.3% above pre-COVID August 2019.
“We are cycling COVID lockdowns in the first quarter last year, with August underlying EBITDA c. $10 million above last year.
“With the return of international travel and uninterrupted trade… KMD Brands is well positioned to deliver continued sales and earnings growth in FY23.”
“Key growth factors in FY23 include strong wholesale demand for Rip Curl, post-COVID tourism and footfall increases, as well as further wholesale expansion to Europe and Canada for Kathmandu.
“Heading into FY23, the Group is well capitalised, and I’m excited by the opportunities ahead as we invest in the long-term expansion of our global house of brands, and build a truly unique global business headquartered in Australia and New Zealand.”