Kathmandu upbeat, lifts profit guidance, gets Fair Labor Association accreditation

By

Sandra Halliday

Published
Jun 25, 2018

Kathmandu is riding high at present with the company saying Monday that strong demand for its autumn ranges, as well as winter promotions, will boost margins and drive annual profits higher. Its shares rose as much as 12% on the new Zealand stock exchange as a result.

It's like-for-like sales in Australia during second half have risen 14% so far, which easily outstrips the 1.9% growth seen in the first half. And sales in New Zealand, which had been proving troublesome, have now turned positive. Like-for-like sales in the year to date are down 1.5%, but that's on the back of a 6.3% decline in H1 and a 4% increase in H2.

It all means the company is expecting net profit for the current financial year of between NZ$48 million and NZ$52 million. That's around a third higher than a year ago when profits were NZ$38 million.

And profit on an Ebitda basis should come in between $72 million dollars and $77 million, up from $57 million a year earlier. In the year to date (the 47 weeks to June 24), sales have risen 7.7%.

CEO Xavier Simonet, who took over exactly three years ago, has been following a strategy of fewer discounts and this has helped the company drive profits up at a faster rate than sales.

“Our second half so far has been strong across both Australia and New Zealand, with Australia experiencing double-digit same store sales growth,” Simonet said. “The autumn season and the start of our key winter promotion have delivered higher sales and profit than planned. The successful launch of innovative new products, enhanced in-store customer experience, inspiring content and engagement on social media and digital channels have contributed to the performance.”

The firm also on Monday said this week "marks a huge milestone for our company as we announce becoming the first brand in the southern hemisphere to receive accreditation from the Fair Labor Association (FLA)."

It means its efforts are independently verified and assessed "on the basis of fulfilling all of the principles of fair labour and responsible sourcing,” Corporate Social Responsibility Manager Gary Shaw said.