Global adventuring and outdoor apparel retailer KMD Brands [ASX:KMD] posted surging sales and rocketing net profit for the six months to January 2023 in its latest financial report.
With international travel demand once again on the rise, the group enjoyed a 34.5% uplift to its Kathmandu brand sales and sent net profit up 352% to NZ$14 million.
Over the last month, KMD’s share price has slumped 7%, not helping its overall tumble since May last year.
Over the course of the past 12 months, KMD has been floundering by 23.5% and is below the wider market average by 19%:
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KMD’s half-year return to growth
KMD has broadcast its return to profit for the first half of the financial year, with a run-down of results over the six months to 31 January.
The group reported sales growth of 34.5% to the total of NZ$547.9 million on the same time the year before, a record first-half result for the group.
Sales growth in Rip Curl continued, and there was also a strong recovery for Kathmandu items and clothing, with another record in first-half sales for Oboz.
KMD reported statutory net profit after tax of NZ$14 million, which equated to underlying net profit of NZ$16.5 million — a huge improvement on the prior year’s first half, whereby the group experienced a loss of $NZ5.1 million.
EBITDA was up 11.4% to NZ$37.6 million, moderated by the impact of channel mix and freight costs on gross margin and increased distribution costs.
Brand expansions added to operating expenses of NZ$276.4 million, an increase of 23% on last year’s NZ$230.9 million.
The group is gearing up for an inventory unwind, which will underpin strong cash flow generation for the second half.
Group CEO Michael Daly said:
‘We are delighted with the results our team has delivered in 1H FY23, building on the strong momentum of the previous six months. We achieved record sales results for the Group, highlighting the strength of our global brands.
‘For the first time since Rip Curl was acquired, the Group has experienced a full 12 months of trade without significant interruption from the COVID pandemic, which resulted in group sales of over $1 billion.
‘Despite uncertainties in consumer outlook, all three of our brands — Rip Curl, Kathmandu, and Oboz — delivered strong sales growth in the half, and as a group we have improved our gross margin.’
KMD remains ‘cautious optimistic’ for 2023
Looking ahead, the global sports and adventure company flagged continuing high freight costs and raw material cost pressures.
Mr Daly expressed that while the consumer outlook remains uncertain, what with global inflation, rising interest rates and its impacts of consumer demand, the group remains ‘cautiously optimistic’.
The group is encouraged by positive sales trends and the return of international travel and tourism.
For the last six months, the outdoors and sporting merchandiser was able to declare a dividend of 3 cents a share, fully franked, which will go to its existing Australian shareholders.
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Mahlia Stewart
For Money Morning
