Retailer weathers tough times
Outdoor adventure clothing and equipment retailer Kathmandu is aiming to more than double its online sales to 10 per cent in coming years and believes it can turn around its troubled British business to deliver another solid full-year result this year.
The company, which listed on the sharemarket four years ago, reported on Tuesday a 26.6 per cent rise in its annual profit to $NZ44.2 million ($39 million) for the 12 months to July 31.
In the midst of tough trading conditions for most retailers, Kathmandu managed to dodge the worst of the downturn that undid other fashion chains, with revenues for the year up a healthy 10.6 per cent to $NZ384 million.
For the full-year, its same-store sales growth, drawn from its 136 stores in Australia, New Zealand and Britain, rose 5.6 per cent. During the year, Kathmandu opened 17 new stores, eight of these in the second half.
Its Australian operation recorded 6.7 per cent same-store sales growth, New Zealand had 4.4 per cent sales growth but its five British stores had a 6.5 per cent sales drop.
Online growth was the standout performer, jumping 55 per cent in 2012-13 to contribute more than 4 per cent of group sales.
Kathmandu chief executive Peter Halkett, who recently returned to work after a two-month illness, said the retailer's digital platform represented huge potential and should eventually generate 10 per cent of group sales.
"There is no reason why we shouldn't be targeting 10 per cent over the next three years," he said.
However, the growth of the retailer's online platform had been held back by the lack of a true omni-channel offering where customers could easily slide between the physical store and an online site to order or pick up their goods.
"It's not an omni channel yet, we haven't got some of the enhancements we think are important to be a modern online retailer, so in many ways we have still got a lot of things to do, but that also reflects there is a lot of growth to come for it."
Some of these enhancements include leveraging the brand power of online stores such as Amazon to sell its range.
New Zealanders on a per capita measurement continued to spend heavily at its stores through both economic upturns as well as softer conditions, Mr Halkett said.
On the outlook for 2013-14, Mr Halkett said, provided there was no deterioration in the economy, the company expected another solid performance characterised by minimising costs and focusing on its growth strategies.
He would not give guidance on actual profit expectations.
"What we have seen last year, and what we have seen for the past four years ... there is no reason why we shouldn't deliver a pretty solid outcome."
Kathmandu will open seven stores in the first half of 2013-14, six in Australia. But during the year the retailer closed a store in England to bring its British store numbers down to five.
Despite its business there never recording a profit, Mr Halkett said Kathmandu remained committed to its British base and it would eventually turn good.
"We believe it's an important part of our longer term strategy that we actually set that business up for success and we have gone through the pain of restructuring it. It's on a firm financial footing, but not profitable yet."
He said some stores had been profitable in their own right but at a country level it had been a "very big drag on profits".
Kathmandu declared a fully-franked final dividend of NZ9¢ per share, up from NZ7¢ per share declared last year.