KMD Brands has returned to growth in the first half of the financial year, with sales up 34.5% to NZ$547.9 million six months ended 31 January, 2023.
The results were boosted by record first half sales - cycling Australasian COVID lockdowns last year - and supported by the return of international travel and tourism.
The momentum continued through a traditionally flat February, as total group sales grew 31.9% compared to February 2022.
KMD Brands CEO Michael Daly said Oboz delivered record sales in 1H FY23, while strong Australian recovery for Kathmandu and continued growth at Rip Curl also lifted results.
“Positive direct-to-consumer sales trends have continued into the second half, and we are well positioned to continue to benefit from the return of international travel and tourism. Products across all three of our brands appeal to a diverse range of consumer interests, ages, and demographics.
“While the consumer outlook remains uncertain, with high global inflation and rising interest rates expected to impact consumer demand, we remain cautiously optimistic. The group is well capitalised and will continue to invest in the long-term global expansion of all our brands.”
KMD Brands reported a net profit of NZ$14 million for 1H FY23, following a NZ$5.1 million loss in the first half of the 2022. The company's underlying earnings before interest, taxes, depreciation and amortisation also grew from NZ$10.2 million in 1H FY22 to NZ$45.3 million.
The group is planning to reduce annualised operating costs by up to 2% of sales for FY24. Operating expenses are currently 50.4% of sales, with FY23 full year operating expenses expected to be c. 48% of sales.
"With a healthy balance sheet, and expectations for strong cash flow generation in the second half, we are in an excellent position to execute on our growth strategy through expanding our global footprint, investing in digital platforms, leveraging operational excellence, and leading the industry through sustainability and innovation," Daly said.
Kathmandu
Kathmandu’s performance in the first half of FY23 was attributed to a strong recovery in the Australian market following COVID lockdowns last year. Total sales were up 51.2% to NZ$194.0 million, driven by a strong rebound in Australia (+59%) after lockdowns, the return of domestic and international tourism in New Zealand (+22%), and international sales of $1.4 million, which includes first deliveries to select new wholesale customers in Europe and Canada.
Online sales normalised at c. NZ$26 million following lockdowns last year, which represents 13.6% of DTC sales, and continues to be significantly above pre-COVID levels. Gross margin increased +580 bps, driven by currency benefit, and the deliberate strategy to carefully moderate the historic “high-low” pricing model.
Oboz
Oboz sales grew 124% on the previous corresponding period from NZ$21 million to NZ$47.5 million. Wholesale and online sales performed strongly in the first half, demonstrating a recovery following last year’s significant supply challenges, as well as strong growth in the new online sales channel which increased the mix of DTC sales.
Oboz experienced a nearly three-month closure of Oboz factories in Vietnam in FY22. Gross margin decreased 50 bps due to elevated international freight costs over the last twelve months, with freight costs now trending towards historical levels.
Rip Curl
Rip Curl recorded growth across all channels, with total sales up 18.8% to NZ$306.4 million for the first half of the 2023 financial year. Direct-to-consumer sales growth was particularly strong in Australasia after COVID lockdowns last year, with Hawaii also growing off the back of a return of international travel.
Wholesale sales recorded 2.2% growth at constant exchange rates, despite softening wetsuit demand from record highs, and strategic destocking from retailers.
While online traffic reduced year on year, online sales remain significantly above pre-COVID levels. The direct-to-consumer (DTC) channel, including owned retail stores and online, generated same store sales growth of 13.9%. EBITDA was up 11.4% to $37.6 million, moderated by the impact of channel mix and freight costs on gross margin, and increased distribution costs.