Spending slowdown drags Kathmandu, Rip Curl and Oboz owner KMD Brands into the red
The company behind shopping mall mainstay Kathmandu and surfwear brand Rip Curl has pinned a $NZ48.3 million ($44.4m) full-year loss on Australian household belt-tightening and a flailing economy in New Zealand.
KMD Brands chief executive Michael Daly said the retailer, which also owns footwear label Oboz, continued to experience the impact of weaker consumer sentiment.
Results for the year to July 31 released on Wednesday showed group sales plunged 11.2 per cent to $NZ979.4m, with falls recorded across all three brands. Kathmandu’s performance in New Zealand was an outlier, with sales down 15.2 per cent.
“Following Kathmandu’s disappointing first-half result, sales trends relative to FY23 improved through the third and fourth quarters, with enhanced in-store and online execution and the launch of new products,” Mr Daly said.
“Rip Curl and Oboz cycled record sales last financial year, with direct-to-consumer sales outperforming the wholesale channel this year.
“The wholesale channel has been more challenging for both brands as wholesale accounts continued to reduce their inventory to manage risk in a challenging economic environment.”
Sales at Kathmandu Australia, KMD’s biggest market, fell 13.9 per cent for the full year. Online sales tumbled 18.9 per cent to $NZ47.7m to be in line with pre-COVID-19 levels.
Rip Curl sales fell 7.3 per cent to $NZ538.9m, helped by a strong performance in Europe, Asia and South America as new stores opened. Online sales rose 8.6 per cent to $NZ37.9m.
But KMD said Oboz had been hit by post-pandemic industry challenges in the North American outdoor footwear category and sales had slumped 20 per cent to $NZ79.4m, with wholesale sales remaining subdued.
The brand copped a goodwill impairment of $NZ40.3m
Despite the “challenging sales environment” as shoppers keep a closer eye on budgets while they await interest rate relief from the Reserve Bank, Mr Daly said Kathmandu had carried momentum from the last quarter of the financial year through to the first eight weeks of 2024-25.
Sales at Kathmandu Australia were up 2.1 per cent year-on-year but the brand in New Zealand was still struggling, with sales down 23.2 per cent.
“We remain cautious on consumer sentiment, given the challenging global macroeconomic environment,” Mr Daly said.
“Global inflationary pressures are easing, but it will take time to directly impact consumer spending.
“In this environment, we are focusing on growing our gross margin, and simplifying our business to drive cost efficiency. We remain focused on returning to sales growth and improving profitability in FY25.”
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