By Jenny Ruth
Thursday 27th January 2011
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Kathmandu's first-half sales result is strong, given the tough consumer spending environment, says Buffy Gill, an analyst at Goldman Sachs & Partners.
The retailer reported group sales in the six months ending January 31 will be up between 16% and 18% to between $124 million and $126 million with same-store (stores open 12 or more months) up 8.9% to 10.3%. It expects earnings before interest and tax (EBIT) will be up between 20% and 26% to between $18.5 million and $19.5 million.
"Trading over December/January was very strong with same store-sales picking up materially after the first 16 weeks of the year," Gill says.
She says the second half of the year is the most important for the company, typically representing about 60% of annual sales and about 70% of profit. Gill expects second-half sales growth of 15% to $161 million with EBIT up 16% to $37 million.
"We believe Kathmandu has an attractive valuation and a positive growth outlook." Its price-to-earnings ration of 12.6 times full-year 2011 earnings is below most comparable retailers in Australia and New Zealand, she says.
The strong first-half result "provides us with confidence that Kathmandu's business model remains intact following a disappointing full-year 2010 result," which Gill attributes to a poor inventory position which has now been repaired.
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