KMD Brands has confirmed it will divest its Southeast Asian manufacturing facility, as its subsidiary Rip Curl reported subdued sales in the second half.
The brand announced this in an ASX trading update today, but didn’t name the facility being divested. According to the company's 2025 modern slavery statement, Rip Curl owns and operates one manufacturing facility in Thailand: a certified B Corp factory called Onsmooth Thai. Rip Curl has owned and operated this factory for 28 years.
Ragtrader has reached out to KMD Brands to confirm the factory name.
KMD’s trading update noted the divestment of the Southeast Asian manufacturing facility will be a phased production wind down over the next 12 months. The transaction is expected to deliver net property proceeds in the range of NZ$5 million to NZ$7 million, as well as freeing up working capital of approximately NZ$6 million, with that expected to strengthen the group’s balance sheet.
This divestment decision follows an ongoing business review that KMD claimed is progressing well, and is expected to be completed by September 23 this year, when the company shares its FY26 annual results.
This asset exit comes as Rip Curl’s DTC same-store sales fell by 2.8 per cent, while its sister subsidiary Kathmandu saw a same-store growth of 4.8 per cent. Despite the split, group underlying earnings before interest, tax, depreciation and amortisation for FY26 are expected to be in the range of NZ$38 million to NZ$41 million, which is up by around 123 per cent on FY25.
Meanwhile, full-year group sales for FY26 are set to land between NZ$1.04 billion and NZ$1.044 billion – up 5 per cent at midpoint on FY25.
“Kathmandu sales continue to improve year on year relative to Q4 FY25, led by a strong performance in the rainwear, fleece and base layer categories,” KMD shared in its trading update today. “Despite year-to-date growth, the insulation category has been impacted during the winter sale period by weaker consumer demand associated with unseasonally warm weather on the east coast of Australia.”
“Trading in New Zealand continues to outperform Australia. Rip Curl sales continue to be impacted by subdued consumer sentiment in Australia and competitor promotional activity. A reduction in the benefit of favourable foreign exchange rates has adversely impacted Q4 FY26.”
KMD added that its third subsidiary, Oboz Footwear, has seen a return to sales growth in the fourth quarter, as anticipated, which management has put down to strong online performance and flow of new product launches.
The Group’s net debt is expected to be in the range of approximately NZ$63 million to NZ$66 million at the end of July 2026. This is slightly higher than at the end of July 2025, when it was NZ$52.8 million.
KMD cited three key reasons why it is elevated, including a change in phasing of payment timing as part of overall trading terms with selected suppliers; investment in additional working capital to secure inventory ahead of potential global supply chain disruptions associated with current geo-political tensions; and weakening of the NZ dollar YoY. The last is believed to be an impact of approximately NZ$8 million.