Kathmandu soars after sales surge

KATHMANDU’S shares have jumped in early trade after it flagged a half-year earnings surge following its Rip Curl acquisition — even though bushfires, hot weather and low December foot traffic will hurt the company’s overall sales figures for the period.

The outdoors and adventure retailer yesterday moved to reassure investors the coronavirus outbreak would not have a significant short-term impact on consumer demand, despite other retailers flagging supply chain disruptions and a hit to sales.

Kathmandu said in a trading update that underlying earnings for the half are expected to grow by about 40 per cent on a year ago after October’s $350 million deal for Rip Curl, although sales for the period will be moderated by fires and hot weather, and a further shift towards Black Friday and Boxing Day events from steady retail traffic.

Investors cheered the announcement, with Kathmandu stocks soaring by 58 cents, or 19.27 per cent, to close at $3.59 yesterday.

Chief executive Xavier Simonet said the acquisition of Rip Curl had allowed the group to “significantly diversify” its products, geography, and channels to market, which showed early benefits by “helping to balance out the Kathmandu business”.

Kathmandu said it achieved same store sales growth of 1.5 per cent for the 26 weeks to January 26.

Online sales grew by over 30 per cent in the half, which the company said was underpinned by enhancements made to the online platform.

Rip Curl total sales for the three months of Kathmandu’s ownership are, according to the group, expected to be 2.7 per cent above the comparable three-month period last year.

Kathmandu also said the coronavirus outbreak was not expected to have a material supply impact in the short term, with sufficient inventory levels currently held, assisted by “the longer stock turn nature of technical product categories”.