Kathmandu profit rises 67 percent

  • 04/08/2016
Kathmandu store
Kathmandu store

Kathmandu Holdings says annual profit has risen as much as 67 percent as better-run promotions widened the outdoor equipment chain's margins.

Net profit was between $33 million and $34m in the 12 months ended July 31, up from $20.4m a year earlier, the Christchurch-based company said in a statement.

That's within Kathmandu's upgraded June guidance of between $32m and $35m, which highlighted the retailer's better margins.

"As indicated in our June update, product newness and careful management of promotional activity have resulted in a better than expected gross margin for FY2016," chief executive Xavier Simonet said.

Cost efficiencies and improved working capital management had contributed to an improved FY2016 profit outcome and generated strong operational cash flows, he said.

Kathmandu's annual profit halved last year as a build-up of inventory forced it into aggressive discounting at lower margins to rid itself of excess stock.

Under the management of Mr Simonet, who was appointed to the role in January 2015, the company is taking a more cautious approach to sales and keeping expenses under control.

Mr Simonet said the retailer's winter campaign registered earlier sales than usual which attracted a higher gross margin. Sales rose 4 percent to $425.5m, while same-store sales increased 1.6 percent, slowing from a 2.6 percent pace in the 47 weeks ended June 26 when Kathmandu last provided guidance.

The retailer will announce its annual result on September 21.

The shares last traded at $1.73 and have gained 11 percent this year.