Rip Curl continues to support the performance of Kathmandu Holdings. Acquired in October 2019, it allowed the Australian group to improve its revenues for the six months ended on Jan. 31, 2021, as it did before. The group’s total revenues progressed by 12.9 percent from the year-ago period to 410.7 million New Zealand dollars (€242.9m-$288.4m), as Rip Curl’s strong performance offset weak sales by the Kathmandu brand. The gross margin declined by 1.2 percentage points to 59.0 percent, while the underlying Ebitda gained 19.0 percent to NZ$48.2 million (€28.5m-$33.8m).
During the period, operations continued to be disrupted by Covid-19 at a number of the group’s stores, with 60 Greater Melbourne locations closed for over 11 weeks during the second lockdown and 14 Auckland stores closed for over two weeks. The company said it implemented a rapid response to changes in consumer preference resulting from the pandemic, adjusting the focus to product categories in high demand, such as wetsuits and surfboards for Rip Curl and camping and footwear for Kathmandu. The management said its omnichannel capability allowed brands to capture record demand for the online channel, with online penetration now making up almost 13 percent of the group’s DTC sales, compared with 8.9 percent last year.
During the period, Rip Curl benefited from increased participation in surfing in Australia, Europe and the U.S. On the other hand, Kathmandu was particularly impacted by Covid-19 related travel restrictions, with reduced demand for insulation and rainwear resulting from a lack of international travelers to the Northern Hemisphere.
The group’s DTC sales growth on a same-store basis, including offline and online stores, declined by 18.5 percent, as Rip Curl’s 7.4 percent gain was not enough to overcome a drop of 35.4 percent for the Kathmandu brand.
Despite the impacts from Covid-19, Rip Curl contributed NZ$48.7 million (€28.8m-$34.2m) to the Group´s underlying Ebitda during the period, delivering a gross margin of 59.9 percent, 0.4 percent higher than in the comparable six-month period of the previous year, thanks to a higher mix of DTC sales. The brand’s underlying sales rose by 86.1 percent to NZ$251.1 million (€148.5m-$176.3m). Restrictions due to the pandemic continued to impact the sales performance of Rip Curl stores in airports, Melbourne, Hawaii, Bali and parts of Europe. The wholesale sell-in period was disrupted during the global lockdowns in April and May 2020 for deliveries from October to December 2020. Sales growth was achieved in key markets of Australia, the U.S. and Europe.
At the same time, multiple headwinds affected the Kathmandu brand’s performance over the period, with 27 Greater Melbourne stores closed for over 11 weeks and 14 Auckland stores closed for two weeks. Underlying sales dropped by 34.9 percent to NZ$127.3 million (€75.3m-$89.4m). Kathmandu was also impacted by low footfall in shopping centers, CBD stores, and tourist locations. Kathmandu’s gross margin inched up by 0.2 percentage points to 64.2 percent.
Oboz, the company’s American brand of outdoor shoes, delivered underlying sales growth of 3.8 percent to US$22.1 million, led by product innovation. The gross margin contracted by 7.3 percentage points to 32.6 percent, impacted by significant one-off air freight costs of US$1.1 million. The management said the forward order book is well above pre-Covid-19 levels. The brand’s Ebitda declined by 20.5 percent to US$2.6 million.
Looking ahead, the management said that it is expecting a strong moment for Rip Curl’s DTC business in the Northern Hemisphere as the summer season approaches. Forward orders for the Rip Curl wholesale business are above pre-Covid-19 levels, encouraging early indications for future seasons.
Following the recent resignation of its CEO, Xavier Simonet, Kathmandu’s board has initiated a search process for his replacement. Simonet continues to work through his six-month notice period.
During the second half of its financial year, the group said it would focus on the strong execution of Kathmandu’s winter season in Australasia. It also expects to see the benefits of synergies and cost-out initiatives across the group, which it expects to deliver around NZ$15 million (€8.9m-$10.5m) of annual savings for the full year.
The company has a number of key initiatives planned for the second half to further connect with its customers to drive increased sales. In particular, it will begin implementing a loyalty program at Rip Curl, and Oboz is launching a DTC online store. Kathmandu continues to invest in personalization and data analytics capability, all with the aim of driving “best-in-class” customer interactions.