Kathmandu Holdings has revealed that its footwear brand Oboz is still heavily impacted by the fallout from COVID.
In a trading update for the first half, the business revealed that Oboz was unable to fulfil approximately 50% of its orders due to factory shutdowns in Vietnam in the first quarter.
However, strong wholesale sales in Rip Curl (up 18.2%) offset the losses experienced by Oboz, pushing Group wholesale sales for the half to 3.4% above last year.
Meanwhile, the Group's same store sales (including online) for the half grew steadily in the period, after the business reopened its Australasian store network.
Rip Curl's year-to-date (YTD) same store sales were down 1.6% on last year but were up 2% adjusted for COVID closures.
And when compared to pre-COVID times (Q2 FY20) Rip Curl's sales were even stronger, up 20%, reflecting the strength of the category and wider participation in surfing.
Kathmandu's YTD same store sales were up 2.8% on the year prior, and up 15.7% adjusted for COVID closures.
However, the impact of COVID on Kathmandu's sales is more evident when compared to Q2 FY20.
The brand's same store sales remained 21.1% below Q2 FY20 (pre-COVID) due to continued restrictions on international travel and tourism.
Kathmandu Holdings Group CEO Michael Daly said that the business is still facing challenges but is pleased with its performance.
"COVID continues to cause ongoing disruption to our consumers, employees and suppliers globally, most recently from the Omicron variant.
"The disruption has resulted in reduced retail footfall, temporary store closures and staffing constraints in many locations.
"Sales conversion has increased as customers have shopped with purpose, and our online channels continue to grow.
"Even though ongoing supply challenges remain, forward wholesale demand for our products remain at record levels.
"In addition, the Group remains well capitalised, investing in the long-term international expansion of our global house of brands," he said.
During the period, the Group's online sales continued to go from strength to strength, with Rip Curl's digital sales up 12.1% and Kathmandu's up 48.6%, now accounting for 17% of Group direct to consumer sales.
As previously reported, the business took a $35 million hit to its EBITDA due to lockdowns and a lack of government subsidies, alongside a additional $14 million investment into brand marketing and international expansion.
As such, Kathmandu Holdings expects underlying 1H FY22 EBITDA to be in the range of $9 million and $11 million.
These figures include 11,696 lost trading days due to COVID restrictions, an increase of approximately 65% on 1H FY21.
Daly added that despite these challenges, the business was pleased to see its brands perform well.
"It was pleasing to see a strong rebound in Kathmandu sales over the second quarter of FY22 following the first quarter’s lockdowns.
"Kathmandu is well placed with appropriate inventory levels and new product introductions for the second half.
"Rip Curl has again performed well in the southern hemisphere summer season, with strong wholesale sales growth, and retail sales consolidating last year’s strong growth and profitability.
"I’d like to thank our staff globally for their continued passion and dedication to growing each of our brands in these very challenging times," he said.
Group total sales for 1H FY22 (unaudited) are expected to be approximately $405 million, with gross margin below 1H FY21 due to COVID-elevated international freight costs, and increased clearance mix for the Kathmandu brand.
The business reports that second half gross margins are currently expected to be in line with last year based on current promotional plans, and expectations of international freight costs and currency impacts.
Net debt is expected to be approximately $48 million with liquidity of approximately $252 million.
The Group intends to release the full result for the half year on Wednesday March 23 2022.