KMD Brands posts $9.7 million loss

Kathmandu parent company KMD Brands has posted a $9.7 million loss in the first six months of its financial year.

KMD Brands sales revenue declined by 14.5% to $468.6m in the period to January 31, compared to $547.9m reported the same time a year earlier. It’s almost $10m net loss for the period compared to an after tax profit of $13.9m last year.

The operator of Kathmandu, Rip Curl and footwear wholesale brand Oboz, said the first half of its financial year had been “challenging” and affected by “weakness in consumer sentiment”.

KMD Brands group chief executive and managing director Michael Daly said sales decreased across all three of its retail brands.

“Weaker consumer sentiment, the warmest winter on record in Australia and an over-reliance on winter weight product led to a disappointing first half for Kathmandu,” Daly told the market.

“In a challenging sales environment, the group improved gross margin despite currency headwinds, controlled operating costs, and reduced working capital.”

KMD Brands will not pay shareholders an interim dividend for the period.

Mohandeep Singh of Craigs Investment Partners said KMD Brands’ earnings would not have come as a surprise to the market.

The company could not issue any full-year guidance for the year, which would make the market nervous, Singh said.

He said the other concern with KMD Brands was its debt was climbing again.

“This is a business that raised equity only a couple of years ago. For a retail business that is cyclical and economically sensitive, we generally don’t want them to hold too much debt,” Singh said.

He said KMD Brands was talking about bringing in third party products to broaden out its range and attract new customers.

KMD Brands shares are down 32% this year, trading around the 52 cents mark.