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Kathmandu boosts 2013 profit 27 percent, expects solid performance in 2014

Tuesday 24th September 2013

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Kathmandu Holdings, the second-best performer on New Zealand's benchmark index the past year, boosted full-year profit 27 percent to a record on increased sales in its main markets of New Zealand and Australia.

Net profit rose to $44.2 million in the 12 months ended July 31, from $34.9 million the year earlier, the Christchurch-based company said in a statement. Sales increased 11 percent to $384 million, outpacing a 9.8 percent rise in operating expenses to $168 million.

Kathmandu, which sells outdoor clothing and equipment, plans to open 15 new stores in 2014, adding to its 136 stores in New Zealand, Australia and the UK. The company plans to expand to 170 stores in its main markets of Australia and New Zealand, from 131 currently.

"Providing there is no deterioration in economic conditions, Kathmandu expects another solid performance in FY2014," chief executive Peter Halkett said in the statement.

Shares in Kathmandu were unchanged at $2.85. The stock has gained 74 percent the past year, making it the second-best performer on the NZX 50 Index behind cloud-based accounting company Xero.

In Australia, which accounts for two thirds of sales, Kathmandu boosted revenue 20 percent to $241 million in 2013 as it added 14 new stores. In New Zealand, which makes up about 36 percent of sales, revenue rose 8.6 percent to $137 million after it added two new stores.

In the UK unit, which is being reorganised, sales dropped 12 percent to $5.9 million as it added one new store and closed two stores. The UK profit margin fell by 200 basis points as the company cut prices to clear stock as a result of the store closures, it said.

Kathmandu plans to increase its online sales, which grew 55 percent in 2013 to account for more than 4 percent of total group sales.

The company will pay a final dividend of 9 cents a share to be paid on Nov. 22.

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