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Kathmandu beats prospectus with dividend, misses with profit

Friday 24th September 2010

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Kathmandu Holdings, the outdoor equipment chain taken public by its private equity owners last year, posted annual earnings that missed its prospectus forecast after weaker second-half trading.

Net income fell to $9.4 million in the 12 months ended July 31, from $14.9 million a year earlier, the company said in a statement. Earnings before interest and tax of $47.5 million missed its forecast of $50.6 million.

The retailer trades on a strong brand built up by founder Jan Cameron, who sold out to Goldman Sachs JBWere and Quadrant Private Equity. The buyout firms subsequently sold their entire holding in an initial public offering last November. The shares rose 0.6% to $1.78 today, having sold in the IPO at $2.13

“The impact of the economic environment on consumer confidence and cost pressures both domestically and internationally are a challenge,” said chief executive Peter Halkett.

Still, “given our market position and brand strength we remain well placed to continue our growth”.

Kathmandu’s gross profit margin was 63.2%, a tad weaker than the 64% margin predicted in the prospectus.

Sales climbed 14% to $245.8 million as the retailer added 15 new stores across Australia, its biggest market, and New Zealand. Same-store sales growth was weaker, at 0.6% in New Zealand and 0.8% in Australia.

“In New Zealand, real consumer spending has reduced in the second half year, and in Australia, sales were supported with higher-than-anticipated levels of promotional activity,” Halkett said.

After a strong first half, the company has faced “a challenging economic environment” through most of 2010 in Australia, New Zealand and the UK.

The company will pay a final dividend of 7 cents a share, up from the prospectus forecast of 6.7 cents.

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