Rip Curl helps Kathmandu report higher first-half sales

Our improved first half operating profit . . . validates the diversification strategy. Xavier Simonet

Outdoor equipment and clothing retailer Kathmandu said yesterday that its group sales for the first half, including a full sixmonth contribution from Rip Curl, were running about 12 per cent ahead of the same time in the previous corresponding period.

In a trading update, the company said its earnings before interest, tax, depreciation and amortisation (Ebitda) were expected to be in the range of $47 million to $49m, including government subsidies.

Outgoing chief executive Xavier Simonet said, “our improved first half operating profit underlines the resilience of our group and validates the diversification strategy, launched through the successful acquisitions and integrations of Rip Curl and Oboz.”

In the previous corresponding half, Kathmandu’s Ebitda came to $78.7m after applying the new accounting standard IFRS16 and $40.5m before the standard.

The company suspended dividend payments last year due to the impact of Covid-19.

Kathmandu plans to release its result for the first half to January 31 on March 23, and said an announcement on its dividend would be made at that time.

The company said its group net debt was expected to be about $7m following careful working capital management and the $207m capital raise in 2020.

Online now represents 13 per cent of Kathmandu’s direct-to-consumer sales, up from 8.9 per cent last year.

During the half, trade at a number of the group’s stores continued to be disrupted by Covid-19. Greater Melbourne stores were closed for more than 11 weeks during the second lockdown, and 14 Auckland stores were closed for over two weeks.

Trading in Greater Sydney was affected over the Christmas period by the Northern Beaches outbreak.

Airport stores in Australia as well as Rip Curl stores in Hawaii, Bali and Europe are still feeling the impact of Covid-related travel restrictions or government-mandated lockdowns and closures.

Simonet said Rip Curl’s record first half performance highlighted the strength of its brand. Forward orders for the Rip Curl wholesale business were running above preCovid-19 levels, he said.

Kathmandu said there had been robust sales growth in camping categories, with renewed interest in local travel and adventure activities within Australia and New Zealand.

However, there was low demand for insulation and rainwear resulting from the lack of travellers to the northern hemisphere.

Kathmandu’s profit has historically been heavily weighted to the second half of the year, when winter in Australasia drives demand for insulation and rainwear.

The Kathmandu board said it had initiated a search process for Simonet’s replacement. In the meantime, he continues to work through his six-month notice period.

Kathmandu bought Rip Curl, an Australian surf brand and action sports company, for A$350m in late 2019.

The company’s shares closed yesterday on the New Zealand exchange at $1.28, having dropped by 47 per cent over the past 12 months.