Analysts at financial institution Jarden think the share price of KMD Brands is overweight and set for a modest swing-back.
This is despite a recent slow start to winter this year impacting sales at its key brand Kathmandu, while Rip Curl and Oboz Footwear face subdued consumer spending.
Jarden’s comments also follow a long-running shakeup in the retail group’s share price, which plummeted at the onset of Covid-19 in early 2020 from a peak of $2.21, then balanced out and peaked again at $1.56 in late 2021, and then gradually slipped down to $0.26 as of writing – it’s lowest price since listing on both the ASX and NZX in late 2009.
In a note to investors, Jarden wrote that the first half of FY25 had appeared to represent a turning point, with quarterly sales momentum improving across all banners.
“Kathmandu sales had been tracking in the mid-single digit growth range, with the closing of the relative performance gap to Macpac supportive of improved brand performance,” they wrote.
However, a mild start to winter has weighed on trading as Kathmandu sales for the four months ending May 25, 2025. This added to an overall slip in sales for KMD Brands overall in the same time frame by 0.5 per cent, offset by a small lift in Rip Curl sales.
Of small comfort, Jarden analysts note that Kathmandu brand sales have since recovered in line with cooler weather, with sales in the first 17 days of June up 13 per cent year-on-year, taking the year-to-date performance (including June) to 0.3 per cent year-on-year.
“Sales trends across Rip Curl and Oboz have also experienced a slow down relative to 2Q25, though not as material and are broadly consistent with what was achieved throughout 1H25,” the note read.
Meanwhile, wholesale channel underperformance continues across KMD Brands, with the group reporting that recent trends are showing green shoots as inventory clears. However, Jarden analysts noted that tariff changes reintroduced uncertainty to purchasing patterns, which led KMD to redirect US inventory in April.
KMD expects the tariff impact on the group’s underlying FY25 EBITDA to be around NZ$1 million (~A$930k).
“Previous commentary had targeted an improvement in wholesale trends in 1H26. Balance sheet trends have similarly worsened, with covenants in place,” Jarden’s note read. “FY25 net debt is now expected by KMD to be c. NZ$70m, having been targeting <NZ$50m as at 1H25.
“The company continues to focus on inventory reduction, which is expected to be down y/y, noting a currency translation headwind will likely mean the value understates the like-for-like reduction achieved.”
With Kathmandu winter trade continuing and the Rip Curl summer trade in the US and Europe commencing, KMD Brands expects FY25 underlying EBITDA to be in the range of NZ$15 million to NZ$25 million with material trade to come. This is down by 60 per cent year-on-year at the midpoint and represents a more than 15-year low according Jarden’s note.
KMD also warned it would participate in heightened market promotional activity, but Jarden analysts noted that with group gross margin down 140 basis points year-on-year in FY25 to date, the margin impact has been greater than expected. “Weighing on margin has been the slower start to Kathmandu's winter sales period, tariffs and changes to the North American surf sector competitive structure.”
Despite all the near-term challenges, Jarden is retaining its overweight rating on a value basis.
“KMD has significantly de-rated over recent years as the Kathmandu brand faced challenges and general consumer weakness weighed on group performance,” the note read. “In our view the pieces are in place for consumer sentiment to begin turning positive, with some early indications the Kathmandu brand is making headway on its improved brand proposition.
“Given the material value discount, we see favourable risk-reward. Key risks to our rating include: (1) worse-than-expected impact from consumer environment, (2) changes to competitive landscape that drive market share losses in key categories, and (3) lack of traction on growth ambitions.”