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Kathmandu sales rise 9.3% in first 16 weeks in 'challenging' markets

Wednesday 24th November 2010

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Kathmandu, the outdoor equipment and clothing chain, lifted sales in the first 16 weeks of the year by 9.3% and predicted earnings growth in 2011.

Sales rose to $51.6 million in the 16 weeks ended November 21, or 2.1% on a same-store basis, down from growth of 19% a year earlier, chief executive Peter Halkett told shareholders at their annual meeting today.

"Assuming there is no further deterioration in trading conditions, management and the board believe Kathmandu will continue to grow profitably in the year ahead," Halkett said. First-half results will depend on the crucial Christmas/January sales period.

Kathmandu recorded a small increase in same-store sales in New Zealand and the UK. Sales weakened in Australia, its biggest market with 55 stores compared to 36 outlets in New Zealand and six in the UK.

Shares of dual-listed Kathmandu rose 3.4% to A$1.23 on the ASX today and have declined 26% this year. They sold at A$1.70 in the 2009 IPO that allowed Goldman Sachs JBWere and Quadrant Private Equity to exit their entire holding.

For 2011, the retailer will focus on its store rollout and refurbishment programme, expanding its product range and maintaining gross margins at 62% to 64%.

Halkett said the company commissioned research into its brand name in the latest year, which is the retailer's "greatest asset." The Kathmandu chain was built up by former owner and founder Jan Cameron.

Halkett said there is "much uncertainty and volatility" in the economic and retail environment, with discretionary spending under pressure.

In the year ended July 31, earnings before interest and tax of $47.5 million missed its prospectus forecast of $50.6 million.

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