Kathmandu stock dives on forecast
SHARES in outdoor clothing retailer Kathmandu lost 25 per cent of their value in a few hours after the company forecast a first-half loss of up to $2 million.
The shares dived 54c, nearly 27 per cent, to $1.47 at the end of the day with $8.8m of shares changing hands in 324 trades.
The company, which has about 145 stories in Australia and New Zealand, forecast a loss of $1 million to $2m in the first half. Last year, it had a first-half profit of $11.4m.
Chief executive Mark Todd said the trading performance during the Christmas and January period had been well below expectations.
‘‘The reduction in same-store sales in Australia throughout December and January, and in New Zealand from Boxing Day onwards, Todd said.
New Zealand’s long hot summer had reduced sales of its cold-
was
disappointing,’’ weather apparel.
Todd also blamed the shortfall on the high levels of sales made in the first quarter at reduced prices to clear excess stock, which he said resulted in a corresponding reduction in second-quarter sales and contributed to overall lower gross margins period.
Hamilton broker James
across Hindin Smalley
the
full
Greene said the company had been hurt by a ‘‘double whammy’’ of negative news. ‘‘This is further bad news from the update they gave us in December,’’ he said.
‘‘The market can be quite severe on companies that follow up one bit of bad news with a second one in quick succession – people start to think, is this going to be an ongoing thing about the outlook of the whole business? They start to doubt management’s ability to turn it around.’’
Since 2012, he said, the company had ‘‘gone from zero to hero and back to zero. They’ve pretty much given up all the gains made over the last two years’’.
The share price has been on the decline since mid-2014, and share value has halved in the last 12 months. Smalley said shareholders would be ‘‘severely disappointed’’, and warned that a re- duction in dividend could also be in the pipeline if the company’s fortunes did not improve.
Kathmandu expects total group sales for the first half of 2015 to be approximately $179.2m, up 6 per cent from $167.6 million in the same period last year.
Shareholders will still be holding out hope for a turnaround in the second half of the year.
Todd said Easter and winter sales seasons were core to the company’s overall earnings performance. Historically over 60 per cent of Kathmandu’s sales were made in this period and last year over 70 per cent of full-year profit was earned in the second half.
In the 2014 financial year, Kathmandu’s gross profit was $42.2m, a 4.5 per cent drop from the year before. Its full result for the half year will be released on March 24.