Kathmandu Holdings has announced that it plans to have all of its Rip Curl and Kathmandu Australian stores reopened by the end of this week.
In a COVID-19 trading update, the business said that it has also witnessed strong online sales growth during the lockdown period, with Group online sales 2.5 to 3 times higher than last year.
Kathmandu Group CEO Xavier Simonet said that the investments the business has made in its online channel have paid off.
"The digital infrastructure and supply chain investments we have made over the last three years have underpinned our ability to rapidly ramp up online trading capabilities and distribution capacity in the face of unprecedented online demand.
"Our customers are clearly seeking products to support their active outdoor lifestyles, while coping with the social restrictions imposed by this global health crisis.
"I would like to thank all our team members from across all parts of our business, who have shown incredible resilience and agility to support our online customers during these challenging times," he said.
Trialling a reopening, Kathmandu and Rip Curl have this week opened most stores in New South Wales and Queensland to assess performance and implementation of health and safety protocols.
The business expects to reopen the remaining stores in Australia by the end of the week, following the same strict health and safety guidelines including; equipping staff with face masks and hand sanitiser; contactless customer service and payment; social distancing measures between customers and team members; and, customer capacity limits in stores.
Meanwhile, the Kathmandu and Rip Curl stores in New Zealand, North America, Europe, Brazil and Japan will remain closed and will reopen as soon as Government directives in each jurisdiction allow.
Helping to keep the business in a strong position has been the NZ$207 million equity raising conducted in early April which received strong support from retail and institutional investors.
The activity helped strengthen the Group’s balance sheet and liquidity position, ensuring it remains well capitalised to navigate through the current trading uncertainties caused by COVID-19.
In addition to the equity raising, the Group continues to implement a series of actions to reduce costs and further strengthen its financial position including:
- Reviewing all operating expenses for potential savings, including the completion of a significant restructuring program for head office functions that is expected to generate c.NZ$15 million of annualised cost savings
- Utilising Government subsidies in Australia, New Zealand, and Europe
- Negotiating with landlord partners to achieve a fair outcome that sees rental costs aligned to sales performance
- Delaying and cancelling existing inventory orders where possible, based on reduced levels of expected demand in the medium term
- Cancelling or deferring all non-essential capital projects, which includes planned ERP spend and store refurbishment
Commenting on the latest outlook, Simonet said that the business is ready to meet the demand for the Group's core customers.
"The Group has responded decisively to the COVID-19 challenges as a team, with the aim of getting through this difficult period and coming out on an even stronger footing.
"In the medium term, consumer demand is expected to be subdued overall, and international travel reduced as a result of the ongoing economic and social impacts of COVID-19.
"However, there is a clear opportunity to answer the needs of our brands’ core consumers as they engage in active pursuits locally, on the beach, in the mountains and the outdoors.
"In this context, we will maintain a strategy focused on brand, product and customer, while continuing to diversify the business and accelerate digital transformation.
"We are a global outdoor and action sports company underpinned by iconic brands, technical products and a focus on sustainability.
"In Kathmandu, Oboz, and Rip Curl, we have authentic and inspirational brands that will continue to attract loyal consumers for the long term," he said.
As expected, the closure of stores has had a material adverse impact on FY20 earnings, however the full impact of COVID-19 on the business cannot yet be determined until more normal trading conditions return.