KMD Brands is expecting its half year sales ending January 31 to be down 14.5%, at approximately $469 million.
The group, which manages Kathmandu, Rip Curl and Oboz footwear, cited ongoing weakness in consumer sentiment for the dive in sales.
Kathmandu is expected to make the highest loss, at negative 21.5%, with Oboz down 20% and Rip Curl at 9.2%.
This is also against a strong first-half in FY23, with group sales then up 34.5%.
Group CEO and managing director Michael Daly said it has been a challenging start to the year, as consumer sentiment continued to weaken.
“Rip Curl and Oboz are cycling record sales last financial year, and while revenues from the direct-to-consumer channel for these brands are showing single digit declines (-4.4%), the wholesale channel has been more challenging (-16.8%) as wholesale accounts reduce inventory holdings,” Daly said. “We expect this inventory reduction cycle to end this financial year giving us a more positive FY25 outlook in the wholesale channel.”
Regarding Kathmandu, Daly said the “disappointing” sales drop was due to a combination of weak consumer confidence, the warmest winter on record in Australia, and the brand’s reliance on winter weight product.
“We expect to see signs of improvement in the second half and into FY25 as we launch new innovative products, quick to market programmes, elevated visual merchandising, increased personalisation through the recently released ‘Out There Rewards’ and an expanded third-party brand strategy.
“Improvement in Kathmandu’s sales performance remains an immediate priority as we approach the key winter trading period.
“The whole KMD Brands team is focused on delivering sales improvement, optimising gross margin, controlling operating costs and reducing working capital.”
KMD’s gross margin remains resilient at 58.8% despite the realised US dollar hedged rate in the first half being down approximately 7% from the prior comparative period.
Operating costs are $16 million below last year, despite continued inflationary pressures. Meanwhile, group underlying earnings before interest, taxes, depreciation, and amortisation (EBITDA) is expected to be in the range of $14 million to $16 million.