‘Revenge spending’ as lockdowns ease
KATHMANDU chief executive Michael Daly is tipping a wave of “revenge spending” at his stores as consumers come out of lockdown and Covid restrictions ease.
Mr Daly said Kathmandu, which posted an improved full year profit result on Tuesday, had high expectations for Christmas.
“What we have seen in the past is that when lockdowns open up quite often there can be a bit of a bounce, revenge spending, or whatever they are calling it these days ... just getting back to normal life and enjoying holidays, enjoying camping and getting out in the outdoors,” he said.
Pent up spending unleashed by consumers was evident in other parts of the Kathmandu business, particularly in opened up economies across the United States and Europe which had triggered a revival of camping, surfing and beach holidays.
A wave of renewed participation in surfing and hiking had helped drive surging profits for Kathmandu’s key retail brands, Rip Curl and footwear group Oboz in 2021, but protracted lockdowns in its key Australian and New Zealand markets over winter hacked away at profits for the core Kathmandu brand.
This strong divergence in the performance of the retailer’s three arms did not however put a cap on group profitability with Kathmandu reporting that total profits had risen to $NZ63.4m ($A61.5m) for fiscal 2021, up strongly from the $NZ8.868m posted in 2020 when Covid-19, lockdowns and the closure of international borders slashed profits by 85 per cent.
Total revenue rose 15.1 per cent for the year to $NZ922.8m, which was below guidance of around $NZ930m.
Kathmandu shares fell 1.4 per cent to $1.41 on Tuesday.
The retailer did warn that due to continued lockdowns and other restrictions caused by Covid-19, its sales since September had suffered and that it was expecting first half fiscal 2022 profit to be below the first half of 2021.
Kathmandu also revealed that like many other retailers it had been hurt by supply constraints, disruptions to its supply chain and the escalating costs of freight and shipping costs.
Leisure activities, outdoor recreation and other recreational pursuits looked to have been impacted in different ways by Covid-19 through fiscal 2021, as lockdowns and the closure of international borders delivered a mixed result for the company.
Its surfwear brand Rip Curl booked a 55.3 per cent lift in sales to $NZ490.4m and a 1252.4 per cent surge in earnings before interest and tax (EBIT) to $NZ56.9m, underpinned by growth in surfing activity. But the flagship Kathmandu retail arm suffered greatly from Covid-19 restrictions on movement and store
closures with its sales falling 17 per cent to $NZ354m and EBIT plummeting by 48.8 per cent to $NZ26.3m.
The Oboz footwear business, bolstered by a strong uplift in hiking participation by consumers, posted a 44.9 per cent lift in sales to $NZ78.4m as EBIT rose 72.6 per cent to $NZ11.4m.
Kathmandu received government grants such as JobKeeper and other wages subsidies of $NZ29.165m for 2021, against $NZ27.369m in 2020.