Australia's love for puffer jackets boosts Kathmandu profits
Australia's love of puffer jackets has helped deliver a boost in profit to New Zealand-based clothing retailer Kathmandu after the Christchurch massacre led to a drop in local sales.
Posting its unaudited trading numbers for the 2019 financial year, Kathmandu revealed its total sales were up 9.6 per cent on the year prior to $NZ545 million ($519.7 million).
Australian same-store sales growth was up 2.7 per cent, picking up the slack for the company's New Zealand stores, which reported a drop in sales of 3.9 per cent.
At constant exchange rates, the company saw growth of 0.6 per cent across its 167 stores, 118 of which are located in Australia.
Kathmandu’s managing director and chief executive Xavier Simonet said while New Zealand trading conditions were "challenging", the company was happy with its Australian performance.
“We were particularly pleased with the second-half performance in Australia given we were cycling strong growth in our key winter period last year," Mr Simonet said.
Earnings before interest and tax are forecast to be between $NZ82.5 million and $NZ84 million, an increase of between 10.6 and 12.6 per cent.
Net profit after tax is set for a similar increase of 10 to 12.8 per cent, with figures expected to be in the $NZ55.5 to $NZ57 million range, ahead of analyst expectations and a record for the company.
Growth in revenue and earnings were down on 2018, however, which saw a 32.9 per cent increase in net profit after tax and an 11.7 per cent increase in revenue.
Investors were initially enthusiastic, with the company's Australian share price skyrocketing 20 per cent to $2.44 in early trade before easing to $2.30.
Kathmandu's profit figures exclude an "abnormal" $NZ1.1 million windfall the company received in the 2019 financial year due to tax refunds resulting from the GST treatment of reward vouchers.
The company also booked net debt of $NZ19.2 million, down $NZ12.2 million on the year prior.
In April, Kathmandu acquired US-based hiking boots business Oboz for $NZ75 million, which it hoped would help the company expand internationally and reduce the company's reliance on the colder winter and autumn seasons.
Mr Simonet said the acquisition had performed well for Kathmandu so far, delivering "strong sales and EBIT growth" which he anticipates to continue throughout the next financial year.
The company will report its audited results in late September.
At its half-yearly results in March, the company reported similar soft sales results, down 2.2 per cent in New Zealand. At the time, chief operating officer Reuben Casey said the Christchurch terrorist attacks earlier in the month had affected sales.
"It's not so much consumer confidence. People just aren't in the mindset to go shopping and there are a lot of vigils and marches," he told the AFR.
The company also suffered a data breach earlier this year when an unidentified attacker gained access to its online store.