Kathmandu has to be more than big jackets
The boss of the company that owns Kathmandu says the retail brand is as strong as it has ever been, but it needs to evolve beyond just being known for its puffy jackets.
Michael Daly, chief executive of KMD Brands – which also owns surfing label Rip Curl and Oboz footwear – doesn’t believe Kathmandu is getting tired or less popular among shoppers, but rather needs to adapt to the more competitive times and rely less on its outerwear range, like its jackets.
This was especially prudent given volatile weather conditions that saw the warmest winter on record in Australia and New Zealand dent sales and profits for Kathmandu, which led KMD to swing to a first-half loss of $NZ9.7m ($9m). This was mostly driven by an $NZ18m loss at its flagship retail arm Kathmandu.
“Kathmandu has been as strong as it has ever been, the brand awareness is strong and if you go to the football any time this winter, you won’t go far without seeing a multitude of Kathmandu jackets,” Mr Daly said.
“I think our execution on outerwear and jackets has been really good but we probably just haven’t adapted and evolved our business for the broader competitive times.
“There’s a lot of competition in the market and we’ve got to be known for more than just jackets … that’s our challenge and until we address that we are going to see probably some rollercoaster rides in terms of trading because when it’s cold and wet people come to us and … if it’s not, they don’t.”
It comes as KMD Brands on Tuesday crashed to a first-half loss as its sales sank amid tightening spending on discretionary goods, especially in camping, trekking and surfing.
Weakness in consumer sentiment punctured demand for the popular items sold at its retail chains, from puffy jackets at Kathmandu to wetsuits at RipCurl, while the warmest winter on record in Australia and Kathmandu’s reliance on winter products led to a disappointing first half.
It has been a tough five years for its flagship Kathmandu retail business, the company said on Tuesday, as it suffers from inconsistent trading conditions, closed borders and tourist flows from the pandemic and a highly competitive Australia and New Zealand camping retail sector.
There was also weak consumer markets for its RipCurl surfing brand, as retailers resist buying new products.
There was a similarly challenging environment in the hiking and trekking footwear industry, which hurt sales for its Oboz footwear brand.
Mr Daly has pledged to initiate a raft of new strategies at Kathmandu, from widening its range beyond jackets and cold-weather clothing to improving product innovation and customer loyalty.
KMD, which is listed on the Australian and New Zealand markets, said it had swung to a loss of $NZ9.67m for the first half, against a profit of $NZ14m last year, with sales down 14.5 per cent to $NZ468.64m. It also skipped paying an interim dividend.
Sales for its Kathmandu brand fell 21.5 per cent to $NZ152.3m, and it recorded an earnings loss of $NZ18m. At RipCurl, sales fell 9.2 per cent to $NZ278.3m with a profit of $20.8m, while Oboz’s sales dropped 20 per cent to $NZ38m, with the division posting a loss of $NZ500,000.
Mr Daly said a focus for KMD would be to cut Kathmandu’s reliance on outerwear and have a greater presence in stores on hiking, outdoor exercise and travel.
In a trading update along with the results, KMD Brands said Kathmandu sales for February were down 2.8 per cent and down 19.9 per cent year to date. Rip Curl’s sales fell 1.7 per cent for the month and 8.2 per cent year to date, while Oboz sales were down 13.3 per cent in February and down 18.8 per cent year to date. Group sales were down 3.5 per cent in the month and 13.2 per cent year to date.