Kathmandu Holdings said in a preliminary annual report that its sales increase by 15.1 percent to 922.8 million New Zealand dollars (€551.4m-$646.6m) in the full year ended July 31, 2021, as its Rip Curl and Oboz brands benefitted from a boom in surfing and higher participation in hiking, respectively. Instead, the Kathmandu brand of outdoor products suffered from new Covid-19 travel restrictions in Australia and New Zealand.
The New Zealand-based group’s gross margin rose by 0.4 percentage points to 58.7 percent. Underlying Ebitda jumped by 35.9 percent to NZ$ 113.3 million (€67.7m-$79.4m) while underlying net income soared by 110 percent to NZ$ 66.3 million (€39.6m-$46.5m).
The results were slightly below the group’s guidance provided in July for underlying Ebitda of NZ$ 120 million (€71.7m-$84.1m) on revenues of NZ$ 930 million (€555.7m-$651.5m).
Rip Curl’s results were included in the group’s results for the full 12-month period as compared to nine months in the previous fiscal year. On a comparable basis, total sales at Rip Curl went up by 10.5 percent to NZ$ 490.4 million (€293.0m-$343.6m) in the year, accounting for about 53 percent of group revenues and outperforming expectations, with sales topping pre-Covid levels in the key regions of North America and Europe during the summer season in the northern hemisphere. Overall, the surf brand’s sales returned to pre-Covid levels despite stores in airports, Australia, Hawaii, Asia and parts of Europe continuing to be affected during the year.
Direct-to-consumer (DTC) same-store sales growth at Rip Curl stood at 19.2 percent. Online sales amounted to NZ$ 33.5 million (€20.0m-$23.5m), representing 12.5 percent of DTC sales and reflecting a four-year compound average growth rate (CAGR) of 44.4 percent. Wholesale revenues were 9.6 percent higher on the year earlier and wholesale forward orders are now “significantly” above pre-Covid levels, the company said.
Rip Curl’s gross margin improved by 2.4 percentage points to 58.9 percent. The operating profit (Ebit) soared by 1,252 percent, reaching an operating margin of 11.6 percent.
At Kathmandu, underlying sales decreased by 17.0 percent to NZ$ 354.0 million (€211.5m-$248.0m). The brand’s performance continued to be affected by ongoing Covid lockdown and travel restrictions, including government-mandated closures of Australian stores in the key winter trading period. Same-store sales, including online, were down by 18.2 percent for the year as a whole and 3.1 percent lower in the second half. Online sales amounted to NZ$ 56.8 million (€33.9m-$39.8m), representing 15.8 percent of DTC sales and generating a four-year CAGR of 14.3 percent.
Despite the impact of Covid-related restrictions, the group said it was “pleased with the early momentum” following the Kathmandu brand’s relaunch in May 2021. “This relaunch will build on strong brand fundamentals and position Kathmandu to grow to a truly global brand,” it said.
Kathmandu’s gross margin increased by 1.3 percentage points to 63.5 percent, benefitting from improved currency rates as well as a focus on promotional execution and inventory management. The brand’s underlying Ebitda fell 38.9 percent to NZ$ 40.8 million (€24.4m-$28.6m).
Oboz footwear instead saw sales grow to NZ$ 78.4 million (€46.8m-$54.9m) from NZ$ 59.4 million the year earlier, with 44.9 percent growth at constant currency rates. Underlying Ebitda rose to NZ$ 11.8 million (€7.1m-$8.3m) from NZ$ 7.6 million and was 70.3 percent higher at constant rates. The brand’s gross margin fell to 35.7 percent from 39.6 percent, impacted by significant one-off air freight costs to support key customer deliveries on winter seasonal styles in the first half, plus increased ocean freight costs due to supply chain congestion in the second half.
As the 2022 fiscal year gets underway, Kathmandu noted that same-store sales for the six weeks to Sept. 12, including the online business, had been “significantly impacted” by ongoing Australasian Covid lockdowns. At Rip Curl, sales were down 12.8 percent overall but 3.6 percent higher when adjusted to exclude stores that were not able to open for a comparable week either this year or last because of lockdowns. Kathmandu’s sales fell by 19.9 percent overall and were 18.3 percent higher on an adjusted basis. Online sales growth in the same period amounted to 25.9 percent, with Kathmandu sales in regions less affected by restrictions doing well and Rip Curl and Oboz wholesale navigating above pre-pandemic levels.
Kathmandu warned that Covid-19 restrictions are also affecting its supply chain, as suppliers have reduced factory capacity due to enforced closures, while freight congestion is leading to delivery delays and increased freight costs. As a result, the group expects first-half profit to be lower than in the first half of fiscal year 2021.
