This is largely due to a wild sale after the arrival of COVID-19, from which the company has not recovered. However, the company has also experienced operational difficulties due to the pandemic, including the impacts of prolonged lockdowns across Australia and New Zealand, and supply chain issues.
On Tuesday, the company released its annual results for the 2021-2022 fiscal year ended July 31, reporting a 6.2% increase in sales to $867 million. However, net profit fell 33% to $32.6 million due to higher costs, including raw materials and wages.
Industry: Various outdoor clothing (boots, jackets, coveralls).
Main product: Down jackets.
Key figures: Managing Director Michael Daly, Chairman David Kirk.
The bull case: In its annual results, Kathmandu reported a 10.3% increase in sales for the month of August, compared to before the pandemic, and a $10 million improvement in revenue compared to last year. .
KMD brands posted record FY22 sales, but profits fell as the impacts of COVID lockdowns took hold.
UBS analyst Bianca Fledderus told clients in a research note that while the company’s earnings for the past year were below expectations, the outlook for the first weeks of the new fiscal year was positive. Kathmandu’s stronger-than-expected balance sheet has also been a plus, he says.
With La Niña likely to bring a wetter-than-usual summer in the Southern Hemisphere and international travel back on the agenda for many, demand for the company’s outdoor gear is expected to remain high throughout. throughout the first half of the 2022-2023 financial year.
The company has also demonstrated a strong record of acquisitions, with Oboz and Rip Curl paying dividends to shareholders. It is possible that additional purchases in the outdoor sector will allow the company to further strengthen its position.
The bear case: Due to being an outdoor retailer, much of Kathmandu’s performance depends on the weather. A warmer-than-expected winter can dampen the company’s sales, and summer is often a slower time for the company, although the Rip Curl acquisition has boosted its performance in the warmer months.
The company is also operating with a high level of inventory due to investment in more inventory due to persistent shipment delays over the past two years, which could lead to increased discounts, affecting profits.
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On Wednesday, Daly admitted the company was “struggling” to find enough staff to work in its stores, as the company had relied on the now scarce backpacker crowd to run its counters. “Most days we will have to keep a store closed [because of lack of staff],” he said.
Kathmandu is also suffering from the same uncertain outlook as many of its retail counterparts, as high interest rates and an increasingly inflationary environment plague discretionary buying.
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