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Strong Christmas bolsters sales

2 Feb 2013 THE AGE - BY COLIN KRUGER


KATHMANDU said it expects to report strong earnings growth for the half year ending January 31 after its recent sales momentum continued throughout the all-important Christmas trading period.

The company said group sales were expected to be up 13.1 per cent to $NZ165.8 million ($134 million) for the half year ending January 31. Same-store sales growth for the 26 weeks to January 27 was 6.1 per cent on a constant currency basis.

Kathmandu shares rose as much as 6.8 per cent on Friday before closing up 4.5 per cent at $1.85.

The stock has jumped more than 40 per cent since last November when Kathmandu told shareholders that year-to-date sales were up 19.5 per cent.

The company said at the time that a better gauge of its performance for the year would be provided by the Christmas trading period, as well as the second half, which has historically accounted for 58 per cent of sales and almost all of its earnings growth.

The chief executive, Peter Halkett, said the retailer's trading performance during Christmas and January had been in line with its expectations.

"Our sales in Australia have continued to grow at a faster rate than New Zealand," he said.

Given the sales performance and steady profit margins, Kathmandu said it now expected net profit in the six months to January 31 to be between $NZ9.5 million and $NZ10.5 million, up from $NZ6 million in the previous corresponding period.

The company expected up to 70 per cent of its full-year earnings to be made in the second half of the financial year and, therefore, did not provide earnings guidance for the full financial year.

"Given this trading pattern and the volatile nature of the retail trading environment, we remain cautious about our full-year result," Mr Halkett said.

Kathmandu's half-year results will be released on March 26.

The company reaffirmed its commitment to opening new stores, with 15 targeted across Australia and New Zealand for 2012-13.

The stock has yet to regain its highs from late 2011 when it traded above $2.

In December 2011 Kathmandu announced a profit downgrade that sent the share price on a downward slide; it bottomed out below $1 in June last year.