Buy Share – Kathmandu Holdings (KMD)

kathmandu logoKathmandu Holdings (KMD) listed as a buy share on the 3rd of October is a New-Zealand-based designer, marketer and retailer of clothing and equipment for the travel and adventure market.

It primarily retails its Kathmandu-branded products, which range from winter clothing through to recreational goods such as sleeping bags and camping accessories.

1H13 Results

KMD reported a 26.6% jump in FY13 net profit to NZ$44.2 million. A final dividend of 9 cents was declared, bringing the full year dividend to 12 cents (20% up on FY12).

The result was delivered on the back of a 10.6% lift in sales to $36.9 million. In New Zealand, sales and EBITDA were up a solid 8.6% and 10.7%, respectively.

In Australia, sales grew 19.5%, which was impressive given the difficult retail environment.

Although the Australian sales growth was mostly attributable to the group’s aggressive store rollout strategy, same store sales were still up a healthy 6.7% on-year.

The group also demonstrated good cost control, with operating expenses as a percentage of sales falling from 44.1% in FY12 to 43.8% in FY13.

KMD has been able to comfortably outperform the broader retail industry due in large part to the strength of its brand, which is synonymous with winter and outdoor apparel.

The group is leveraging the strength of its brand through a digital strategy that delivered a 55% surge in FY13 online sales. Online sales now make 4% of overall sales and are growing rapidly.


KMD was vague about its outlook, saying only that it expected another solid result in FY14 amid an uncertain economic environment.

We are more optimistic than KMD about the outlook. The group delivered a standout result in FY13, which was arguably a tough year overall for retailers.

Whilst the operating environment is likely to remain challenging, the record low interest environment and rising consumer confidence should provide greater support for the Aussie retail sector in FY14.

The group is not resting on its laurels, targeting another 15 new store openings in FY14, enhancing its online offering and investing in new product categories.

On top of a continued focus on cost control, we believe KMD is on track for another strong result in FY14.

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