Kathmandu has clocked a record performance for the promotional winter period, as it prepares to trade its way back to pre-COVID profitability.
KMD Brands, which operates Kathmandu, Ripcurl and Oboz, has provided an update on trading performance for the year ending 31 July, 2022.
Total sales are expected to be in the range of $955 million to $965 million.
Underlying EBITDA is expected to be in the range of $88 million to $94 million, with underlying EBIT in the range of $53 million to $59 million.
While the year-on-year impact of COVID on first half EBITDA was approximately $35 million, the company has reported an improvement in trading conditions for the second half.
This is despite the pandemic's continued to impact footfall, particularly in the third quarter, and caused sporadic store closures due to staff availability.
Same store sales year-to-date remain positive for both Rip Curl (+2.1%) and Kathmandu (+7.3%).
Group CEO and MD Michael Daly said all brands are on track to grow as pandemic restrictions ease.
“Rip Curl’s wholesale and direct-to-consumer retail channels continue to perform well. Wholesale order books are above prior year levels as we look forward to next year.
“Pleasingly, Kathmandu has experienced a record winter promotional period in Australia. Second half gross margins are well above last year due to a combination of currency benefit and updated promotional execution.
"Trading in New Zealand was weaker than in Australia reflecting lower growth in consumer footfall and revenues, offset by improved gross margins reflecting the deliberate strategy to carefully moderate the historic “high-low” pricing model.
"While Q3 was impacted by the ongoing COVID outbreak in both counties, Q4 profitability is expected to be above pre-COVID levels absent of any new government restrictions.”
Daly confirmed Oboz is also on track, after disruptions to its supply chain as a result of the pandemic.
“Oboz is recovering from the three-month COVID closure of Vietnam factories in the first half, compounded by shipping congestion and international freight delays."
Oboz has received approximately two hundred thousand pairs of footwear in the past two months, as suppliers resumed full production. Additional supply has been secured for future seasons to meet order book demand.
“Inventory levels are forecast to be above last year, reflecting decisions taken in the light of ongoing supply chain disruption, to accelerate orders to meet forward wholesale orders and expected retail demand," Daly said.
"Inventory quality remains high, with depth in carry forward styles, and lower clearance levels year on year. The Group continues to target our long-term objective of 0.5x net debt to underlying EBITDA.
“We continue to deliver on our objectives to grow KMD into the leading family of global outdoor brands by elevating digital infrastructure and the consumer experience, leveraging operational excellence, and being a leader in ESG.
"KMD is well positioned for growth as travel rebounds globally, and COVID impacts on consumer behaviour and international supply chains ease.”