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Kathmandu eyes dual-brand strategy in Northern Hemisphere assault

Tuesday 18th September 2018

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Kathmandu Holdings says its two brands offer "significant growth potential" as the outdoor equipment chain seeks to crack America and Europe. 

The retailer bought US footwear supplier Obōz Footwear for up to US$75 million earlier this year as part of a two-pronged strategy to accelerate expansion overseas. Kathmandu derives just 4.1 percent of its revenue outside New Zealand and Australia. 

The Obōz acquisition is part of a wider strategy to turn what's been primarily an Australasian retailer into a global outdoor apparel and equipment brand. Kathmandu is targeting existing Obōz customers in the US for its namesake brand, leaning on New Zealand's international reputation for having a pristine environment and as an adventure travel destination.

"It’s an exciting time for the business as we welcome Obōz to the group and accelerate our international growth," chief executive Xavier Simonet said. "In Kathmandu and Obōz, we have two great brands with significant growth potential in North America and Europe."

Kathmandu has spent the past couple of years improving the profitability from its New Zealand and Australian operations by dialing back discount sales and taking a more rigorous approach to managing inventory. 

That's been largely successful with the retailer generating its third year of earnings growth under Simonet's leadership. The company today reported net profit of $50.5 million in the 12 months ended July 31, up 33 percent from a year earlier. Sales rose 12 percent to $497.4 million and gross margins widened to 63.4 percent from 61 percent. 

In late June the retailer signalled profit would be between $48 million and $52 million and Forsyth Barr analyst Jeremy Simpson forecast profit of $52 million. The shares rose 2.2 percent to $3.25, near a four-year high reached last month. 

Kathmandu will pay a $1,000 bonus to staff who aren't on an incentive plan to recognise the retailer's three-year run of strong performance. The company cut New Zealand staff numbers by 38 full-time equivalents to 468 over the past year, reducing total headcount to 1,256 from 1,273. That offset the additional 21 staff taken on in the Obōz acquisition. 

Still, the wage bill rose 8.6 percent to $90 million. Key management pay rose 16 percent to $5.3 million. 

The board declared a final dividend of 11 cents per share, with a Nov. 19 record date and paid on Nov. 30. That takes the annual return to 15 cents, a 15 percent increase from a year earlier. 


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