Kathmandu outlook cautious
Kathmandu has warned that conditions will remain difficult, despite reporting a 70 per cent jump in first-half profit on Tuesday on the back of strong sales from its Australian stores and good cost control.
"The current economic conditions are not going to suddenly turn around. It is unlikely we're going to see any improvement in the second half," said acting chairman John Harvey, filling in for chief executive Peter Halkett, who was absent due to illness.
"Given the continued difficult market conditions, particularly the recent weather patterns, we don't believe it is appropriate or even possible to give specific guidance other than to say that we do remain confident that we will be able to deliver a strong performance for the full year," Mr Harvey said.
Last month the company said it expected up to 70 per cent of its full-year earnings to be made in the second half of the financial year when Kathmandu has two of its most significant sales, including the Easter ones which are now starting.
For the six months to January 31 Kathmandu reported a 72 per cent rise in net profit to $NZ10.3 million ($7.7 million) with revenues up 13.1 per cent to $NZ165.9 million.
The result was in line with guidance following a profit upgrade last month.
In a statement to the market on Tuesday Mr Halkett said the company opened nine stores in the half and grew its online sales by 50 per cent but the online channel contributes less than 5 per cent of overall sales.
The company still expects to open 15 permanent stores for the full year.
"There was strong sales growth over the period, underpinned by successful new store openings and a solid increase in same store sales, despite a challenging market overall," Mr Halkett said.
Same-store sales in Australia - which provides more than 62 per cent of its sales - were up 9.6 per cent for the six months to January 31. Same store sales in New Zealand, its other major market, were up 1.3 per cent.
The company's EBIT margin (earnings before interest and tax) increased from 8.7 per cent to 9.5 per cent with costs as a percentage of sales expected to reduce slightly for the full year.
The stock has jumped more than 40 per cent since November when Kathmandu told shareholders that year-to-date sales were up 19.5 per cent.
Kathmandu continues its search for a new chairman following the death of James Strong earlier this month.
rise in net profit to $NZ10.3 million
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