Kathmandu Holdings has praised the strength of the Rip Curl brand as it unveils its first half FY21 results.
The surfwear brand delivered an 86.1% increase in sales to NZ$251.1 million for the period of August 20 to January 21.
Direct-to-consumer (DTC) same store sales growth (comprising owned retail stores and online) was up 21.0% adjusted
for COVID-19 lockdowns and 7.4% overall.
Meanwhile, the brand's online sales underwent a step change, up 79% vs the comparable six month period last year, and comprised 11.2% of DTC sales.
Rip Curl also contributed NZ$48.7 million to Group underlying EBITDA during 1H FY21, delivering a gross margin 40 bps (0.4%) higher than the comparable six month period last year, as a result of a higher mix of DTC sales.
Group CEO Xavier Simonet said that Rip Curl's strong results demonstrate that the Group's strategy is working.
"Despite operating in challenging conditions over the first half due to the substantial impacts from COVID-19, Rip Curl delivered an outstanding first half result, validating the Group’s diversification strategy.
"Benefiting from increased participation in surfing in Australia, Europe and the USA, Rip Curl achieved strong sales and profits despite COVID-19 trading restrictions, reflecting the brand’s technical product focus and strong consumer engagement.
"Pleasingly, Rip Curl’s wholesale order book is back above pre-COVID-19 levels," he said.
Meanwhile, sister brand Kathmandu had a more challenging half, suffering under COVID travel restrictions.
During the period, Kathmandu had 27 Greater Melbourne stores closed for over 11 weeks, and 14 Auckland stores closed for two weeks.
This, combined with reduced footfall to shopping centres, CBD stores and tourist destinations, saw the brand's sales decline 34.9% to NZ$127.3 million compared to NZ$195.5 million in H1 FY20.
Same store sales were down 30.0% adjusted for COVID-19 lockdowns and 35.4% overall.
However, Kathmandu's online penetration increased during the period to 14.4% of sales, up from 10.5% in the first half of FY20.
"Kathmandu was particularly impacted by COVID-19 related travel restrictions, with reduced demand for insulation and rainwear resulting from a lack of international travellers to the Northern Hemisphere," Simonet added.
"Over the first half, we implemented a rapid response to changes in consumer preference resulting from COVID-19.
"To respond to increased participation in local travel and adventure, our brands adjusted their focus to product categories in high demand, such as wetsuits and surfboards for Rip Curl, and camping and footwear for Kathmandu.
"Omni-channel capability allowed our brands to capture record demand for the online channel, with online penetration now making up almost 13% of the Group’s direct to consumer sales," he said.
The Group's footwear brand Oboz delivered sales growth of 3.8% to US$22.1 million for the half, underpinned by a focus on product innovation.
The business reports that the brand will launch a DTC online store imminently to drive further sales growth.
Overall, Kathmandu Holdings came out of the half in a positive position, recording a 12.9% increase in sales to NZ$410.7 million for the half.
The business delivered a 19% increase in EBITDA to NZ$95.4 million, while gross profit jumped up 10.8% to NZ$242.5 million.
Kathmandu Holdings closed the half with a robust balance sheet, with NZ$10.1 million in net debt.
The business resumed dividends at the end of the half, paying NZ 2.0 cents per share interim dividend declared (fully franked
for Australian shareholders, and not imputed for New Zealand shareholders).