Kathmandu's summit climb

Kathmandu has overcome the worst winter on record to post a solid lift in earnings.

Kathmandu (KMD) boss Peter Halkett may have a firm eye on the economic climate, but it is the climate that is more concerning to his retail operation.

Kathmandu sales are overwhelmingly concentrated in the second half, the lead up to winter. And with the vast bulk of the stores located in Australia and New Zealand, it is remarkable the company achieved the financial results it offered up this morning given the weather.

Both countries reported their warmest winters on record. And while store rollout was a major contributing factor to the 10.6% revenue growth to $NZ384 million, like for like sales store growth grew 5.6%. And that includes the drag from the struggling UK operations.

Cost control allowed net profit to grow 26.6% to $44.2 million, highlighting the stark difference in performance between various discretionary retailers.

That has allowed the company to lift its final dividend to 9c from 7c last year, taking the full year payout to 12c.

Online sales grew at a remarkable 55%, although that is of a low base. Rather than shift out of traditional bricks and mortar, however, Kathmandu continues its store roll out, opening 15 new stores in Australia, 2 in New Zealand and reducing its UK store network by 1.

Discretionary retail has been rocked by the rise of internet shopping in recent years. But the rapid growth in Australian uptake of imported goods via the net appears to be decelerating (see Kathmandu weathers changing retail climate).

UK online giant ASOS for years held Australia out as a beacon of growth. Figures released in recent days, however, indicate that no longer is the case with growth, while still at a cracking 26% in the 3 months to August, dropping sharply from previous levels.

As is the fashion these days, the UK group blamed the federal election. The more likely catalyst though would be the 12% depreciation in the Australian dollar which has reduced the price differential between local retailers and their international rivals.

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