The Australasian COVID lockdowns significantly impacted Kathmandu Holdings' earnings for Q1, the business has revealed in a trading update.
The business reports that net COVID impact is expected to result in Q1 operating profit being approximately $35 million below last year as lockdowns in NSW, Victoria, ACT and NZ were more severe than prior comparative period, without any direct Government subsidies being received to buffer the blow.
Same store sales (including online) for the 13 full weeks to October 31 2021 were down 9.4% overall for Rip Curl and down 17.6% overall for Kathmandu.
However, when adjusted for COVID lockdowns*, Rip Curl's same store sales were up 1.6%, while Kathmandu's were up 16.3%.
With stores closed during the period, the Group's online sales continued to grow strongly at 33.8%, with Rip Curl's up 11.2% and Kathmandu's lifting 58.4%.
Kathmandu Holdings Group CEO Michael Daly said while the business has been disrupted by the lockdowns, it is ready for peak season trading.
"COVID-19 continued to be a major disruption in the first quarter, with Australasian retail stores significantly impacted by lockdowns, and supply chain disruption impacting our ability to fulfil strong wholesale demand.
"Despite the challenging trading conditions to date, we are ready to capitalise on growth opportunities as COVID restrictions ease.
"The Group continues to invest in the long-term expansion of our global house of outdoor brands," he said.
Global supply chain disruptions are particularly impacting the flow of products into the business' North American markets.
Additionally, the Group reports that Oboz product deliveries will be impacted for Q2 as Vietnam footwear factories slowly ramp up production following COVID closures during Q1.
Further, demand for Rip Curl wetsuits continues to exceed available supply, while freight, logistics and raw material costs remain elevated.
However, the business reports that Rip Curl and Kathmandu are well prepared for the key Black Friday and Christmas trading period, and inventory levels are sufficient to meet expected demand.
And as Australia largely comes out of lockdown, the Group has seen promising trading figures from the first weeks of reopening.
Following the reopening of NSW and Victoria markets, Rip Curl is cycling +27% same store sales growth adjusted for COVID lockdowns* from Q1 FY21.
Additionally, Rip Curl and Oboz wholesale order books remain significantly above pre-COVID levels.
However, despite the positive momentum, the uncertainty surrounding the COVID trading environment persists, so the Group has not provided forward guidance.
*Adjusted same store sales removes stores that were not able to open for a comparable period in either year because of COVID lockdowns.