Heavy rain a dampener on Kathmandu

A less than stellar summer’s trading has sent the share price of outdoor clothing manufacturer Kathmandu tumbling.

Shares fell 40c, or more than 14.6 per cent, to $2.32 yesterday, after the company gave a trading update which revealed summer sales expectations had not panned out.

Kathmandu’s first half profit had been expected to come in strongly above last year’s, and it had been tracking well for the first 15 weeks of the year, when guidance was given at its annual shareholder meeting in November.

But this was dependent on a successful summer sale, and in both Australia and New Zealand December sales had been ‘‘below management expectations’’ or the previous year.

Commentators noted the heavy rain over December in New Zealand may have had something to do with it.

‘‘They’ve been pretty solid in terms of their updates and this is the first particularly negative one they’ve had in a few years,’’ Grant Davies from Hamilton Hindin Greene said.

The share price swing could have also been heightened by light holiday trading and a big spread, the gap between what buyers were paying and Kathmandu shareholders were selling for, he said.

Other clothing companies may also have been affected by the damp December, but few are on the sharemarket.

Hallenstein Glasson tempered expectations of its Christmas trading at its shareholder meeting last month, even though it saw net profit jump 58 per cent last year.

Davies said Kathmandu would now be focussed on its upcoming Easter sale.

‘‘The sunshine coming out now might be too late for their main sale, but still hopefully that’s going to help.

‘‘It’ll be all about the upcoming Easter and winter sales at this point, and trying to make sure they’re not overstocked.’’

Too much stock was one of the problems behind Kathmandu’s difficult year in 2015 which triggered an unsuccessful takeover bid from major shareholder Briscoe Group.

However, last September the company seemed to be well on the comeback trail, announcing a full year net profit of $50.5 million, an increase of $12.5m. Before-tax operating earnings (EBIT) were up 30 per cent.

Kathmandu chief executive Xavier Simonet said that despite a disappointing Christmas and Boxing Day, it had been pleasing to see an improvement in retail gross margin and continuing strong growth from its recently acquired Obo¯ z footwear business.

‘‘The sunshine coming out now might be too late for their main sale, but still hopefully that’s going to help.’’ Grant Davies of Hamilton Hindin Greene