Kathmandu signals improved FY2016 outcome

Kathmandu_Rundle 4Outdoor clothing retailer, Kathmandu is expecting a full year profit of NZ$32.0 million to NZ$35.0 million (A$30.57 million-A$33.44 million), up from the previous year’s $20.4 million as the company boosts margins from new products, better management of promotional activity and cost savings.

The Christchurch-based retailer is estimating an EBIT of $49.0 million to $53.0 million, up from last year’s $33.2 million.

“Despite the winter season starting late this year, product newness and careful management of promotional activity have resulted in a better than expected gross margin,” said Xavier Simonet, Kathmandu’s CEO.

“This combined with continued realisation of cost efficiencies has contributed to an improved FY2016 outcome,” Simonet said.

Same-store sales have increased 2.6 per cent in the 47 weeks ended June 26 on a constant currency basis.

Its shares soared NZ21 cents to a four-week high of $NZ1.54, making them the best performer on the S&P/NZX 50 benchmark index on Thursday.

Kathmandu’s annual profit halved last year as a build-up of inventory forced it into aggressive discounting at lower margins to rid itself of excess stock.

Under the management of Simonet, who was appointed to the role in January 2015, the company is taking a more cautious approach to sales and keeping expenses under control.

Still, the company said “a substantial proportion” of sales and earnings this financial year are still dependent on trading in July, the final month of the financial year.

Earlier this year, the outdoor clothing retailer reported a half-year net profit increase of NZ$9.4 million ($A8.38 million), bouncing back from the NZ $1.8 million loss it made in the previous corresponding period.

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