By Jenny Ruth
Wednesday 11th May 2011
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Kathmandu Holdings' very strong third quarter sales were driven by new stores, favourable weather, the late Easter, an expanded product range and higher advertising cycling a weak previous third quarter, analysts at Goldman Sachs & Partners.
Kathmandu reported sales for the 13 weeks ended May 1 rose 31.6% while sales through stores open 12 months or more were up 23.2%. In the previous two quarters, sales were up 19.3% so sales for the nine months ended May 1 were up 23.1%.
"This is particularly pleasing, given the tough retail conditions faced by other discretionary retailers during the period," the analysts say.
"The late Easter led to higher demand for cold-weather products during the company's Easter sales period. April was particularly cold with average temperatures below the previous comparable period in Melbourne, Sydney and Brisbane," they say.
Kathmandu's Easter sale is the smallest of its three sales periods while the Winter sale, beginning in late June is the largest."
"The company needs to maintain solid momentum, given that it generates over 30% of group earnings in the fourth quarter of the year."
The analysts have upgraded their forecasts on the back of the sales report. They now expect Kathmandu to report a $36.1 million net profit for the full year, up from their previous $33.7 million forecast and reported earnings for 2010 of $28.3 million.
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