KMD Brands achieves record revenue

Company News

by Glenn Dyer

KMD Brands (ASX:KMD), formerly known as Kathmandu, celebrated a milestone as it exceeded NZ$1 billion in annual revenue for the first time ever. The global chain enjoyed a mostly trouble-free year of trading in its major markets, following a challenging year marred by Covid-19 lockdowns and travel restrictions.

The previous fiscal year had seen KMD's performance adversely affected, particularly in Australasia, due to the impact of Covid-19 and unfavorable weather conditions on the East Coast of the Australian market. Consequently, the improvements in trading for 2022-23 appeared even more remarkable in comparison.

Despite these notable improvements, shareholders did not witness a change in the final and full-year dividend payout, which remained consistent with the previous year at 3 NZ cents and 6 NZ cents per share.

The company's sales performance in 2021-22 had already set records with revenue and earnings reaching new highs, a trend that continued into 2022-23.

KMD reported robust sales growth across all its key markets in the year leading up to July, with its Rip Curl and Oboz brands achieving record-breaking sales figures.

Despite facing increasingly reluctant consumers in the fourth quarter, KMD's sales for the year to July surged by 12.6%. Nevertheless, the company expressed confidence in its strong performance positioning it well for 2023-24.

Kathmandu sales showed strong growth in the first three quarters but faced challenges in the fourth quarter due to rising cost-of-living pressures and an unusually warm winter in Australia. KMD noted that the warm weather compared to the previous year's best-ever winter trade season impacted sales.

The company reported an underlying EBITDA of $NZ105.9 million, marking a 15.1% increase from the Covid-depressed 2021-22 year, despite softening consumer sentiment in the fourth quarter.

KMD's statutory net after-tax profit stood at $NZ36.6 million, while the underlying figure increased by 8.6% to $NZ43.3 million.

In terms of its brands, KMD highlighted Rip Curl's exceptional performance, achieving record sales of $NZ581.5 million, up by 8.3%. The company attributed this success to strong direct-to-consumer results, especially in Australasia after lockdowns, and the return of international travel to destinations like Hawaii and Thailand.

Kathmandu's total sales also increased by 10.6% to $NZ422.2 million in FY23, with significant growth in the first three quarters as customers returned to shopping in stores. However, cost-of-living pressures and the warm winter affected sales in the fourth quarter. Australia saw a 7.0% sales growth, while New Zealand experienced a 13.1% increase.

Oboz's sales made a remarkable recovery, surging by 61.8% to nearly $NZ100 million. KMD attributed this growth to the wholesale channel's strong rebound following significant supply constraints in the previous year.

The company concluded the fiscal year in a financially robust position, with net debt at $NZ55.7 million and funding headroom of over $NZ100 million.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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