KMD Brands confirms Goldman Sachs role as refinancing talks proceed

KMD Brands, the New Zealand-listed outdoor apparel group that owns Kathmandu, Rip Curl and Oboz Footwear, confirmed on March 16 that it has engaged investment bank Goldman Sachs to assist with treasury and capital management strategy as part of an ongoing review of its funding options.

The confirmation came in a statement to the Australian Securities Exchange (ASX) and the New Zealand Stock Exchange (NZX), issued in response to reporting by the Australian Financial Review’s Street Talk column that the group was about to undertake a major recapitalisation. KMD was clear that no decision to pursue recapitalisation has been made and that no refinancing terms have been agreed.

The mandate is advisory in nature, focused on capital structure optimization rather than signalling any imminent asset disposal or forced restructuring. The company added that it had previously disclosed, in a Feb. 2 market update, that it was already in discussions with lenders on the refinancing of its long-term debt facilities. Media reports have separately indicated that the lender syndicate involved is led by Commonwealth Bank and Westpac, though KMD has not confirmed this.

Debt load rising, cost targets under strain

The announcement arrives against a backdrop of growing analyst scrutiny of the group’s balance sheet. KMD’s Feb. 2 trading update projected net debt at Jan. 31, 2026 at between NZ$85 million and NZ$90 million (approximately €47.6 million – €50.4 million at the March 16 mid-market rate of 1 NZD = €0.56), up from NZ$76 million (approximately €42.6 million) in the same period a year earlier. The company attributed part of the increase to the depreciation of the New Zealand dollar.

Broker Jarden, in an investor note last month, acknowledged the currency explanation but flagged that it does not fully account for the more than NZ$10 million debt reduction originally targeted for FY26. The broker pointed to reinvestment requirements, underlying cost inflation and foreign exchange headwinds as factors likely to erode the impact of the cost-reduction programme currently underway.As part of the Feb. 2 update, KMD extended its debt facility to April 2027 and reduced total syndicated bank facilities to approximately NZ$283 million (approximately €158.5 million).

KMD’s H1 FY26 underlying EBITDA guidance of NZ$8 million to NZ$11 million (approximately €4.5 million – €6.2 million), while ahead of the NZ$3.9 million recorded in H1 FY25, falls below the NZ$15.1 million delivered in H1 FY24. Jarden described the H1 FY26 trajectory as indicating growth in the group’s underlying cost of doing business.

Margins improving off lows, but still compressed

KMD’s group gross margin stood at approximately 56.7 percent at the end of December 2025, down 100 basis points year-on-year. That represents a 20-basis-point improvement relative to the first quarter of FY26, when compression reached 120 basis points – a tentative signal that the trough may have passed, though the full-year picture remains under pressure. The partial recovery is broadly in line with KMD’s own guidance, which had signalled that margin headwinds would persist through the first half before easing in the second. Jarden attributed the improvement to product mix shifts, reduced clearance activity and new product introductions, including the Team New Zealand range at Kathmandu.

Sales growth across all three brands

Total sales for the five months through December 2025 rose 7.9 percent year-on-year, led by Kathmandu with a 12.9 percent lift. Rip Curl grew sales by 5.6 percent in the same period, while Oboz Footwear posted a 4.5 percent increase – although that figure masks a pronounced November–December surge of 21 percent that offset a 1.3 percent slip in August through October. Jarden noted that Kathmandu’s growth rate is converging with that of rival Super Retail Group’s Macpac brand, which reported a 13 percent total sales increase for the six months through December 2025.

For both Kathmandu and Rip Curl, momentum slowed in the final two months of 2025 compared with the preceding quarter. Jarden attributed this to tougher year-on-year comparatives, noting that both brands had recorded stronger relative gains in the same period of the prior year. The broker separately flagged North America as an area of strong sales momentum for Rip Curl, while noting it would look for more detail on tariff impacts on gross margins in that market at the half-year results.

Store closures, outlook and share price

KMD has confirmed plans to close 14 stores across the group in FY26 as part of its cost reset strategy. Jarden expects most of those closures to fall in the second half of the year, given limited evidence of them in the Feb. 2 trading update. The broker, which retains an overweight rating on KMD stock, described the situation as a stabilisation “at low levels,” adding that new product launches and a network reset in H2 FY26 should begin to provide directional confidence. It cautioned, however, that cementing the turnaround trajectory is likely to take more than 12 months.

KMD’s share price on the ASX has fallen approximately 47 percent over the past year. On March 16, it was trading at AU$0.18 on the ASX, down approximately 25 percent year-to-date. The group is scheduled to release its statutory half-year results on March 25.