KMD Brands Limited, the parent company of Kathmandu, Oboz, and Rip Curl, reported a preliminary update of its results for the first half of 2024 fiscal year that ended January 31.

Group sales are expected to be approximately NZ$469 million for the fiscal first half, a decline of 14.5 percent versus the prior-year corresponding period. The company said the decline reflects ongoing weakness in consumer sentiment but also a tough comparison against a prior-year period with a 34.5 percent gain.

  • Rip Curl sales were down 9.2 percent year-over-year (YoY) for the six-month period that ended January 31, cycling an 18.5 percent increase in the prior-year comp period.
  • Oboz sales fell 20.0 percent YoY for the H1 period, cycling a 124 percent increase in the prior-year H1 period.
  • Kathmandu sales declined 21.5 percent YoY in the fiscal H1 period, cycling against a 51.2 percent increase in the prior-year period.

Group gross margin remained resilient at 58.8 percent of sales despite the realized U.S. dollar hedged rate in the first half, down approximately 7 percent from the prior comparative period.

Operating costs were reportedly NZ$16 million below the prior-year period despite continued inflationary pressures. The company said all brands continue actively managing costs in a challenging consumer environment.

Group inventory at the end of the H1 period was $5 million lower than the end of the prior-year comp period, and net working capital was $18 million lower than last January despite lower sales.

The company expects the Group’s underlying EBITDA for the first half to be in the range of NZ$14 million to NZ$16 million.

“It has been a challenging start to the year, as consumer sentiment continued to weaken,” explained Group CEO & Managing Director Michael Daly. “Rip Curl and Oboz are cycling record sales last financial year, and while revenues from the direct-to-consumer channel for these brands are showing single-digit declines (-4.4 percent), the wholesale channel has been more challenging (-16.8 percent) as wholesale accounts reduce inventory holdings. We expect this inventory reduction cycle to end this financial year, giving us a more positive FY25 outlook in the wholesale channel.” 

Daly said the Kathmandu brand had experienced softer trading results since June 2023.

“A combination of weaker consumer sentiment, the warmest winter on record in Australia and the brand’s reliance on winter weight product has resulted in a disappointing first half,” he suggested. “We expect to see signs of improvement in the second half and into FY25 as we launch new innovative products,quick-to-market programs, elevated visual merchandising, increased personalization through the recently released “Out There Rewards” and an expanded third-party brand strategy. Improvement in Kathmandu’s sales performance remains an immediate priority as we approach the key winter trading period.”

Daly added that the KMD Brands team focuses on improving sales, optimizing gross margin, controlling operating costs, and reducing working capital.

The Group will release its full results for the six-month period in March.

Images KMD Brands/Rip Curl