Outdoorwear retailer Kathmandu is leading the sales momentum at KMD Brands, with its direct-to-consumer same store sales (including online) lifted by 11.1 per cent in the six weeks to March 15 this year.
The retailer has also improved its gross margin by around 50 basis points.
Kathmandu’s recent sales follow a 12.3 per cent lift in underlying sales in the first half of FY26 to NZ$176.1 million. This joins an 81.6 per cent improvement in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to negative NZ$2.4 million, with its EBIT losses slashed by half to negative NZ$10.2 million, up from a negative NZ$22 million in the first half of FY25.
According to KMD Brands, Kathmandu showed strong sales momentum throughout the first half, and improved from 2.5 per cent year-on-year in the fourth quarter of FY25.
Its Australian sales lifted 10.2 per cent, with New Zealand up 8.9 per cent.
Online sales were in line with last year, hitting NZ$20.6 million and comprising 11.8 per cent of DTC sales.
Same store sales (including online) increased by 12.8 per cent.
Despite the sales boom, Kathmandu’s gross margin slipped by 1.5 per cent of sales, as management focused on selling through aged inventory in the first quarter, and maintaining competitive promotional intensity through the second quarter.
Total inventory for Kathmandu at the end of the first half was NZ$9.8 million lower than last year – or NZ$13.5 million lower at constant currency.
This comes as KMD’s total sales hit NZ$505.4 million, up 7.3 per cent, with its gross profit up 5.3 per cent to NZ$287.1 million. At the bottom line, the group’s net loss after tax hit NZ$13.1 million in statutory terms and NZ$11.5 million in underlying terms. In underlying terms, this is up by 28.4 per cent.
According to KMD, Kathmandu’s key Autumn and Winter trading periods are still to come. The company added that Kathmandu is also on track to achieve gross margin expansion YOY in the second half of FY26, with consumers responding positively to improved product flow and assortment.
Kathmandu’s sister subsidiaries, Rip Curl and Oboz, both recorded sales lifts in the first half too, with their wholesale order books for the second half reportedly being in line with last year, with the Europe and North America summer season to come.
KMD noted that gross margin expansion is anticipated year-on-year in the second half, reflecting actions taken to offset the US tariffs, and cycling specific clearance of inventory in the second half of last year.
Group underlying operating expenses as a percentage of sales are also forecasted to improve, showing progress towards mid-term targets.
Meanwhile, underlying operating expenses for the full year are planned to be broadly flat year-on-year on a constant currency basis, with KMD noting this will be before any FY26 management incentives. The year-on-year impact of global currency fluctuation is expected to have a significant impact on underlying operating expenses.
KMD concluded its outlook by reporting that the group remains on track to achieve its ‘Next Level’ strategic cost reset savings. Launched in September 2025, KMD’s ‘Next Level’ strategy includes a minimum $25 million cost reset.
KMD Brands group CEO and managing director Brent Scrimshaw said that since launching its Next Level strategy, the company has accelerated the pace and quality of execution and returned each of our brands to growth in a short timeframe.
“Strong early progress has been made against our key initiatives, giving us further conviction in our potential,” Scrimshaw said.
“We’re particularly encouraged by the improved performance of Kathmandu, which has delivered double-digit same store sales growth for the first time in over two years. It’s also pleasing to see consumers responding positively to our accelerated product freshness, flow and assortment, along with a renewed focus on innovation.
“While Rip Curl has navigated more volatile global trading conditions, we remain confident that the brand’s repositioning will drive long-term growth and youthful energy, connected to the next generation of core surf and beach consumers.”