By Jenny Ruth
Friday 17th June 2011 3 Comments
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The news Kathmandu founder Jan Cameron has invested up to $20 million in competing outdoor equipment retailer Macpac just as her five-year non-compete agreement with Kathmandu expires comes as no surprise, says Buffy Gill, an analyst at Goldman Sachs & Partners.
"Ms Cameron has had a reasonable past track record in retailing, and the expansion of Macpac will indeed increase competition for KMD and other outdoor retailers, in our view," Gill says. Macpac has a strong brand name in New Zealand but less so in Australia, she says.
But Macpac's focus over the past few years has been on cost cutting and it hasn't made a significant investment in its design team. KMD, by contrast, has grown its design team from 10 to 40 people since 2006.
Cameron sold KMD in 2006 for about $275 million. Gill estimates its current enterprise value is about $490 million.
"We believe KMD is well placed to compete against Macpac and others, given its strong brand with growing awareness, investment in product development and range expansion, major economies of scale, and an extensive and growing high quality store network.
In the first nine months of the year ending July, KMD increased sales 23% even though Macpac expanded from 27 stores to 29 stores, Gill says.
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