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Kathmandu half-year net profit $10.5m

Thursday 17th March 2011

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Outdoor clothing and equipment company Kathmandu Holdings reported half year net profit of $10.5 million, with same store sales growth of 12.1%.

Earnings before interest and tax for the six months to January 31 were 28.4% ahead of a year earlier at $19.9 million, while revenue was up 19.3% to $127.1 million, Kathmandu said today.

The company's shares were up 5c to $1.99 in early trading, in a broadly falling sharemarket. An interim dividend of 3c per share is to be paid.

Kathmandu chief executive Peter Halkett said that since the company's initial public offer - in late 2009 - it had made a considerable investment in people and resources, and was now delivering a broader product offering across a store network that had increased by 18 stores, or about 22%, since the start of the 2010 financial year.

The company's restructured balance sheet with lower debt levels had enabled it to carry higher stock holdings across key product categories when compared to the investment in stock before being listed.

"This is the first six-month trading period that reflects the outcome of key growth initiatives, in particular an increased long term investment in inventory, that are now able to be pursued under our new capital structure with lower debt levels," Halkett said.

"We have seen strong ongoing same store sales growth in Australia and New Zealand since early December. The new products and ranges released this summer, supported by improved availability across our entire range have been a key driver of this result."

During December and January weather conditions were also favourable for sales in some categories, particularly in Australia given the relatively cool and unusually wet summer on the east coast.

The overall result for the full year remained dependent on the second half year performance and in particular the key winter sale trading period at the end of the financial year, Halkett said.

"Winter sale remains our largest annual promotional event, and this means we must successfully execute our strategies until virtually the last day of winter sale before we can be confident about our overall year's result."

The company was well positioned to improve its year on year performance.



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