Kathmandu’s first half sales have come in at $179.2 million, an increase of 6.9 per cent compared to $167.6 million in the prior comparative period

Same store sales growth for the 26 weeks ended January 25 was 2.8 per cent.

Despite the increase, the sales result is below expectations, and gross margins for the half year will be below the levels of the prior comparative period, particularly in Australia.

For the first half of the 2015 financial year the company is estimates EBITDA will be $6 million to $7 million, compared to last year’s $22.6 million, with NPAT a loss of $2 million to $1 million, following a profit of $11.4 million in the 2014 first half.

“The reduction in same store sales in Australia throughout December and January, and in New Zealand from Boxing Day onwards was disappointing,” said Todd.

The major reasons for the sales shortfall were that the levels of sales made in the first quarter at reduced prices to clear excess stock, particularly in Australia, has brought about a corresponding reduction in second quarter sales and contributed to overall lower gross margins across the full period; sales mix across the Christmas and January period reflected lower than expected demand for summer and non-technical apparel categories in particular; and reduced sales levels in NZ after Christmas of cold weather apparel categories during an extended period of dry and warm weather.

Despite slower than expected sales, total inventory levels at end January are expected to be reduced relative to the same time in 2014, due to ongoing improvement in management of seasonal purchasing.

“Successful execution of our key sales promotions in Easter and Winter are core to our overall earnings performance for the full year as historically over 60 per cent of Kathmandu’s sales are made in this period and last year over 70 per cent of full year’s profit was earned in the second half of the year,” said Todd.