Kathmandu Holdings had record sales and profit for the first half of its financial year, ended on Jan. 31 2020, boosted by the acquisition of Rip Curl during the period. Revenues were also driven by a good performance by its New Zealand business and robust sales at Oboz, the American outdoor footwear brand that it acquired in 2018.
The Kiwi group’s revenues soared by 56.7 percent to $363.6 million New Zealand dollars (€196.7m-$215.0m), with Rip Curl accounting for 37 percent of total turnover, Oboz for 6 percent and Kathmandu for the remainder.
In the outdoor segment, which includes Oboz and Kathmandu, sales grew by 0.4 percent in constant currencies to NZ$ 228.7 million (€123.7m-$135.3m), with wholesale up by 7.0 percent and direct-to-consumer down by 0.6 percent. Oboz saw sales improve by 10.4 percent. The segment’s gross margin declined by 2.6 percentage points to 60.4 percent, weighed down by higher input costs as a result of foreign currency, a higher mix of clearance sales, and the increased weight of North American wholesale revenues.
Australia and New Zealand accounted for 89 percent of the outdoor segment’s sales, North America for 10 percent and Europe for 1 percent. In Australia, sales declined by 0.9 percent due to an ongoing network optimization, while in New Zealand, they inched up by 0.5 percent. In the rest of the world, revenues advanced by 6.1 percent.
Comparable sales in the segment progressed by 2 percent in Australia, with only some impact from bush fires and unusually hot weather. They inched up by 0.5 percent in New Zealand, following two years of negative same-store sales. E-commerce accounted for 11.1 percent of direct-to-consumer revenues over the 12 months up to Jan. 2020, up from 9.5 percent for the previous year.
In the surf segment, which only includes Rip Curl, sales from Nov. 19 to the end of Jan. 2020 reached NZ$ 128.8 million (€69.7m-$76.1m), up by 4.8 percent in constant currencies. Comparable sales progressed by 3.7 percent. Wholesale revenues gained 1.8 percent, while direct-to-consumer climbed by 4.8 percent.
By region, Australia and New Zealand grew by 3.2 percent in constant currencies to represent 44 percent of sales. North America accounted for 23 percent the segment’s turnover, Europe 15 percent and Rest of World 18 percent. The segment’s gross margin stood at 59.8 percent and the Ebitda margin was 13.7 percent.
Overall, Kathmandu’s gross margin declined by 1.8 percentage points to 60.2 percent. The Ebitda margin fell by 1.0 percentage point to 11.1 percent, while net income declined by 41.7 percent to NZ$ 8.1 million (€4.4m-$4.8m), due to acquisition costs of NZ$ 10.1 million (€5.1m-$5.5m).
The management announced at the end of March the closure of its 175 stores, including Rip Curl outlets, in the wake of the coronavirus pandemic. It will continue e-commerce operations in Australia, Europe and the U.S. Online distribution in New Zealand has been suspended. The company has also closed down its offices and sent employees to work from home.
Looking ahead, the company said it will continue to make big efforts toward sustainability, after becoming a certified B corporation, as previously reported. It also scored an A in the Ethical Fashion report. In total, the group recycled 9.7 million plastic bottles into its gear in the course of 2019.
Providing some details about its strategy, Kathmandu said it will focus on growing the core markets of Australia and New Zealand, develop the Summit Club loyalty program, and continue the optimization of its store network. It is also striving to diversify by growing the contribution of the summer season. It will continue to enhance the customer experience on the digital and mobile fronts.
