Happy campers help Kathmandu beat prospectus forecast for first-half profit

Thursday 18th March 2010

Kathmandu Holdings, the outdoor equipment retailer that dual-floated on the New Zealand and Australian share markets in November, posted a first-half profit that beat its prospectus forecast.

Profit excluding costs of its initial public offering was $4.4 million in the six months ended January 31, from a loss of $2.4 million a year earlier, the company said in a statement today. Sales climbed 28% to $106.6 million. EBITDA of $18.1 million beat the prospectus estimate of $15.1 million.

Kathmandu sold shares near the bottom of its marketing range in its IPO last year, allowing private investment firms Goldman Sachs JBWere and Quadrant Private Equity to sell their entire stake in the business. The shares jumped 9% to $2.39 on the NZX today, up from the New Zealand IPO sale price of $2.13.

Costs of the IPO, including advisory fees, blew out to $21.3 million from the prospectus’ $15 million estimate, which the company put down to additional work required for dual-listing purposes and changes in banking arrangements. The costs contributed to a net loss of $11.3 million.

Kathmandu won’t pay an interim dividend. Same-store New Zealand sales rose 14% and Australian same store sales gained almost 10% in the first half, the company said.

The full-year prospectus forecast is for a net profit of $30.9 million, which chief executive Peter Halkett reiterated today, saying it was dependent on a successful second half trading year. Some 60% of anticipated sales will be determined by key Easter and winter sales, and weather conditions during the colder months.

“Whilst this was a very positive result and ahead of our prospectus forecast it must be remembered that Kathmandu’s first half year provides a relatively low proportion of the full year’s profit,” Halkett said.

In summarising the company’s trading performance Halkett said there had been positive same store sales growth and strong results from Christmas sales promotions. Stay-at-home holidayers and campers also contributed.

Eight new stores were opened in Australasia in the first year half, and Kathmandu intends opening 12 in total this year, and a similar number next year. The company won’t yet be adding to its six U.K. stores as it has an ongoing uncertain short and medium term outlook and a slower expected recovery period than downunder. It has 82 stores in total.

Kathmandu plans to refurbish 13 stores this full year; increasing store size and tailoring product offerings to match climate and demographics.

Significant new product releases will be introduced this winter, especially some new thermal ranges and travel accessories. Much lowered inventories in the first half of this year of just under $39 million compared to almost $46 million a year earlier was achieved, and Kathmandu said further improved inventory management will reduce out of stocks on key lines.

Halkett said as set out in the prospectus, no interim dividend will be paid, but that subject to forecasts being achieved a 6.7 cents a share dividend will be declared in respect of the second year half.

Businesswire.co.nz

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