Punters jump off Kathmandu
INVESTORS have punished outdoor clothing retailer Kathmandu with the shares diving 21 per cent to $2.20 after the company warned of lacklustre Christmas sales in its biggest market, Australia.
Kathmandu shares dropped 58 cents to $2.20 at the end of the day after the company said store sales and gross margins for Christmas sales in Australia were well below last year.
First-half earnings would be lower than the previous first half, it said.
Kathmandu’s previous halfyear profit to the end of January 2014 was $11.4 million.
Kathmandu acting chief executive Mark Todd said the company was reviewing its strategy and pricing for the second half of the year, starting in February, given that the challenging retail market in Australia was expected to go on for some time.
In New Zealand and the United Kingdom samestore sales were currently up on the same period last year.
‘‘In Australia, our trading performance throughout the Christmas period to date has been below expectations, which is a reflection of negative consumer confidence and a difficult discretionary retail trading environment,’’ he said.
There might still be potential for the company’s outlook to improve in the remaining 41 days of trading in the first half, which ends on January 31.
However, he did not expect any recovery to be enough to make up the shortfall in gross profit.
At last month’s annual meeting, Kathmandu advised sales for the financial year up to 16 November 2014 had increased by 18.6 per cent.
Yesterday, because of lower sales in Australia, the company’s total sales increase for the financial year to 21 December 2014 had narrowed to 14.1 per cent.
However, it would be the second half that determined its overall profit.
‘‘While first half earnings will be down on the result achieved last year, our overall profit result for the full year remains primarily dependent on second-half trading, which in the 2014 financial year contributed over 70 per cent of our total year’s profit,’’ Todd said.
Sharebroker Hamilton Hindin Green director Grant Williamson said it was a major turnaround from what Kathmandu had been telling the market.
‘‘Conditions have obviously changed pretty quickly for them. The company has not been performing that well and sales have dropped considerably at a time when they should be doing relatively well.’’
The Kathmandu share price was always quite volatile. The $2.20 price was the lowest since mid-2013, he said.
‘‘It’s a pretty drastic
‘It’s a pretty drastic fall we’ve seen today. It’s a big surprise and a big disappointment for investors.’
Grant Williamson Hamilton Hindin Green
fall we’ve seen today. It’s a big surprise and a big disappointment for investors,’’ Williamson said.
The company did not sound confident it could turn the poor Australian performance around in the rest of the first half.
‘‘I think it once again shows the very volatile retail environment we have seen over the last few years.’’
New Zealand sales volumes of Kathmandu shares at 1.1 million yesterday were higher but ‘‘not hugely so’’ or out of the ordinary. Australian share sales volumes were higher at 4.3 million and that was quite a lot higher than the last few weeks, Williamson said.
Christmas sales were critical to most retailers.
If they did not shift stock before Christmas they would have to heavily discount on Boxing Day and in the New Year.
‘‘To not be doing well preChristmas is not great for a retailer,’’ Williamson said.