KMD Brands’ key subsidiary Kathmandu has reported a slower than expected start to the key winter promotional period, with sales down 11.5 per cent in the first three weeks compared to the same time last year.
These sales are below the usual improving second-half trend. KMD added that Australian sales are in line with the second-half trend for the early winter sales, with New Zealand trade remaining a challenge.
“Australian sales have improved each week as we progress further into the winter season,” KMD reported.
Kathmandu sales from February to May this year were down 8.4 per cent, a marked improvement compared to first-half sales which were down 21.5 per cent. KMD’s other brands Rip Curl and Oboz Footwear also reported negative sales growth from February to May, at 5.9 per cent and 21.8 per cent respectively.
Rip Curl’s sales have slightly improved from its 9.2 per cent negative sales growth recorded in the first half, while Oboz increased its negative sales growth from 20 per cent in the first half.
Overall group sales were down 8.4 per cent from February to May following a 14.5 per cent negative growth in the first half.
Meanwhile, Rip Curl has started its peak summer trade in the Northern Hemisphere, with direct-to-consumer sales for the USA and Europe for the start of summer showing positive single digit growth above last year, with peak weeks still to come.
Rip Curl and Oboz wholesale customers continue to reduce their inventory holdings in response to the challenging consumer environment.
Despite its overall sales drop, Oboz online sales are up 28.9 per cent for the 10 months to May amid promotional activity and new products.
KMD reported that whilst second half sales have improved on the first half trends, the expected continued improvement at the start of Kathmandu’s key winter trading period has not materialised.
The group now expects underlying earnings before interest, tax, depreciation and amortisation to be approximately $50 million for the full year, based on the most recent sales trends across all brands.
The Group has six weeks of peak Kathmandu winter trade and Rip Curl Northern Hemisphere summer trade still to come.
“With six weeks of peak trade still to come, we remain focused on optimising our Kathmandu winter and Rip Curl Northern Hemisphere summer results in a challenging consumer environment,” group CEO and managing director Michael Daly said.
“We are seeing a prolonged impact of cost-of-living pressures on consumer sentiment globally but particularly in New Zealand, and we continue to respond tactically to competitive market dynamics.
“Alongside immediate trading priorities, our focus remains on tightly controlling operating costs, moderating working capital, and maximising cash flows.”