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Kathmandu shares rise to all-time high as analysts upgrade estimates after record annual profit

Wednesday 25th September 2013

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Kathmandu Holdings rose to an all-time high as analysts upgraded estimates following the outdoor equipment and clothing retailer record full-year earnings and bullish outlook statement.

Shares in Kathmandu touched a record $3.40, and were recently up 5.4 percent to $3.35, taking their gain so far this year to 60 percent. The shares gained 12 percent yesterday after the company reported profit rose 27 percent to $44.2 million in the 12 months ended July 31.

Brokerage Forsyth Barr expects Kathmandu's profit will rise to $46.7 million in 2014 as the company expands its footprint, increases online sales and benefits from an improving economic backdrop, analyst Chelsea Leadbetter said in a note. The company plans to open 15 new stores in 2014, adding to its 136 stores in Australia, New Zealand and the UK.

The brokerage raised its earnings expectations for 2014 and 2015 by 4.4 percent and for 2016 by 5.1 percent, helped by lower interest costs after Kathmandu reduced its debt as a result of lower working capital and capital spending. The majority of the improvement appears sustainable, Leadbetter said.

Forsyth Barr retained its "hold" recommendation on the stock, while First NZ Capital raised its rating to "neutral" from "underperform", according to Reuters data.

"Kathmandu is a strong, best of class retailer with growth opportunities through store rollouts, expansions/upgrades of existing stores and the online channel," Leadbetter said in her report. "However, we believe this is largely reflected in the share price."

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