Apparel and lifestyle retail group KMD Brands has entered a trading halt ahead of launching an equity capital raise, just days after rejecting a proposal to spin off its Rip Curl business. This places fresh focus on the group’s balance sheet and brand portfolio strategy.
The company – which also owns Kathmandu and Oboz Footwear – confirmed it is pursuing a capital raising via a placement and an accelerated renounceable entitlement offer (AREO), in conjunction with the release of its half-year results for the period ending January 31, 2026.
KMD shared that it has already commenced a confidential “wall crossing” process with select investors, signalling the raise is well advanced. The trading halt, requested from both the ASX and NZX, will remain in place until the terms of the raising are finalised and disclosed to the market.
KMD also delayed its audited half-year results announcement for later this week in an ASX release earlier this morning. The company was due to release this today, but told investors it is not presently in a position to release its results as intended today.
These announcements today came after the group confirmed earlier this week that it rejected a proposal from US surfwear company Stokehouse Unlimited to demerge its Rip Curl business.
KMD claimed the proposal by Stokehouse – which currently manages surfwear brands Vissla and Sisstr – would unfairly dilute KMD shareholder value. The proposed transaction would have involved KMD demerging Rip Curl into a separate NZX and ASX listed company and subsequently merging Rip Curl with the US entity.
Stokehouse proposed that after the full transaction is complete, its shareholders would own 22 per cent of the merged Rip Curl entity.
KMD chairman David Kirk said the concept proposed by Stokehouse creates no value for shareholders and is challenging from an execution standpoint.
“In addition, the combination of multiple surf brands that directly compete with each other is not a strategy that has proven effective,” Kirk added. “Our focus remains on executing the Next Level strategy, which has already gained momentum.”
All of this comes as KMD strives to turn around its key retail businesses, with a preliminary trading update in February indicating that trend improvements are on track.
Kathmandu posted a double-digit lift in revenue for the five months between August and December 2025, outpacing its sister brands Rip Curl and Oboz Footwear.
For the five months to December, Kathmandu sales grew by 12.9 per cent, with sales stronger in the three months to October (up 13.9 per cent) compared to the last two months of 2025 (up 12.1 per cent).
Rip Curl’s sales were still quite modest, up 5.6 per cent in the five months to December, with similar movements to Kathmandu in the first three months and the last two months.
Country Road Group – the Australian fashion group under Woolworths Holdings Limited in South Africa – also reported softer sales closer to Christmas 2025.
In a note to investors, Jarden analysts added that foreign exchange movements also provided a tailwind to KMD’s half-year sales.
“While headline brand sales growth numbers appear to have slowed from the 1Q run rate, this generally reflects more difficult comps in 2Q, with the compounded sales from FY24 showing continued momentum quarter-on-quarter,” Jarden noted.
“Importantly, the competitive dynamics for Kathmandu vs. Macpac appear to have converged, with the latter reporting total sales growth for the six months to December of +13% (SSS +8%).”
For Rip Curl, Jarden analysts said that North America was called out as showing strong sales growth, but added they will look for more colour in the audited half-year results on the impact of tariffs on gross margins in that market.
On top of this, a gross 14 store closures were planned for the first half of FY26, but the broker expects these will be weighted to the back end of the period, “i.e. not strongly evident in the trading update”.
Meanwhile, KMD’s gross margin is improving off lows, but Jarden shared this remains suppressed year-on-year.
“At the full year, KMD signalled margin pressure was expected to remain in place through 1H26 ahead of a recovery beginning in earnest in 2H26.”
KMD’s gross margins in the five months to December 2025 was 56.7 per cent, or 100 basis points below the same time last year. This is up from a 120 basis point compression experienced in the first quarter of FY26.
“Margin improvement is expected to have been driven by a combination of mix, lower clearance, and new product introductions,” Jarden noted. “We note the launch of the new Team New Zealand gear in Kathmandu, which equates to c. 3% of online SKUs.”
The preliminary half-year update by KMD also confirmed maiden first-half EBITDA guidance of NZ$8 million to NZ$11 million, which Jarden thinks indicates growth in underlying cost of doing business. This comes as KMD is in the middle of a cost-out programme, but the broker thinks a combination of reinvestment, underlying cost inflation, and FX headwinds is likely to more than offset this.
KMD’s group net debt is expected to be NZ$85 million to NZ$90 million, slightly below Jarden estimates, but up year-on-year from NZ$76 million. While this in part is explainable by FX impacts on conversion, Jarden shared this puts some question around the more than NZ$10m reduction targeted for FY26.
“We make limited changes to our underlying earnings profile, with small absolute upgrades to FY26 on the back of better trading over the holiday period,” Jarden noted.
Overall, Jarden retained its overweight rating on KMD stock, with a target price of NZ$0.45. KMD’s share price has slumped to NZ$0.16, its lowest point since officially going public in 2009.
“KMD has shown a stabilisation in the base, but at low levels, and now needs to deliver on underlying improvements in margin through better product and mix,” Jarden noted. “New product launches and a reshape of the store network should begin to take place in 2H26 and will help provide some confidence, though the turnaround will likely take >12 months to cement the trajectory.”
KMD is expected to share its audited half-year results either tomorrow or Friday.