Retailer faces uphill battle to fill US orders

FIRST it was hit by a shortage of wetsuits, now Kathmandu is struggling to fill orders of its hiking boots in the US.

Outdoor adventurewear retailer Kathmandu is the latest business to confess to massive operational dislocations caused by Covid-19, as factory shutdowns in Vietnam and havoc across global supply chains resulted in half the orders for its Oboz hiking shoes business unfilled.

The company said on Friday that it expected underlying first half EBITDA to be in the range of $8.37m to $10.25m, following a $32m hit to its earnings, and additional brand marketing investment of $13m.

While there was a rebound in sales for its flagship Kathmandu stores, as people once again took to the outdoors and bought camping and trekking gear, and an improved performance from its surfwear brand Rip Curl, supply chain issues hurt its Us-based hiking footwear chain Oboz.

Retailers have been plagued by supply chain issues since the pandemic began as shipping containers, raw commodities and labour became hard to source.

Kathmandu flagged in November that its Rip Curl business was suffering from a wetsuit shortage. Now it’s the turn of Oboz, which Kathmandu bought four years ago for just under $100m.

In a trading update for the 26 weeks through January, the New Zealand-based company said supply chain disruptions and factory closures in Vietnam had strangled its supply of boots and hiking shoes to its Oboz chain in the US.

“First-quarter factory shutdowns of Oboz product suppliers in Vietnam have materially impacted its ability to meet demand, with approximately 50 per cent of orders unable to be fulfilled,” it said.

“The company expects a gradual recovery from the transitory supply constraints in the second half.”

Kathmandu said demand for the Oboz brand and products had never been stronger and forward orders into fiscal 2023 still supported mediumterm revenue growth targets.

The supply chain problems for Oboz follow a similar warning in November when Kathmandu group chief executive Michael Daly cautioned surfers to brace for a shortage of wetsuits as demand exceeded supply.

“Covid continues to cause ongoing disruption to our consumers, employees and suppliers globally, most recently from the Omicron variant,” Mr Daley said.

“The disruption has resulted in reduced retail footfall, temporary store closures and staffing constraints in many locations. Sales conversion has increased as customers have shopped with purpose, and our online channels continue to grow.”