KMD Brands Ltd. (Group) reported sales in the fiscal third quarter ended April 26 grew 5.2 percent as gains of 12.0 percent at the Kathmandu retail chain and 4.0 percent growth at Rip Curl, partially offset by an 8.9 percent decline at the company’s Oboz brand that was said to be due to the timing of orders.

Same-store sales in the quarter were up 8.9 percent year-over-year (y/y) at Kathmandu while slipping 0.8 percent at Rip Curl.

Group gross margin for the quarter was reported at 58.2 percent of sales, approximately 258 basis points (bps) higher y/y with improvement across all brands. The gross margin improved 140 bps compared to first half of the fiscal half.

Rip Curl
Rip Curl’s global direct-to-consumer sales growth reportedly benefited from favorable foreign-exchange impacts.

KMD Brands said, “Sales momentum softened following the onset of the Middle East conflict, with higher fuel prices and rising interest rates further impacting global consumer sentiment. North American flagship stores continued to deliver strong comparable sales results YOY.  Rip Curl’s wholesale sales remained in line with last year.

Rip Curl gross margin reportedly improved 202 bps y/y, due to promotional cadence. Third quarter gross margin improved 62 bps compared to the fiscal first half.

Kathmandu
Total sales increased 12.0 percent in the third quarter despite a net reduction of seven stores versus the prior-year quarter,  including one closure within the third quarter.

Same-store sales (including online) climbed 12.6 percent y/y, or +8.9 percent at constant exchange (ce) rates, in the third quarter due to “continuing sales momentum in both Australia and New Zealand with consumers responding positively to improved product innovation, assortment and flow.” Growth was reportedly seen across key product categories, including insulation, which the company said demonstrated that the Next Level product led recovery is beginning to resonate with customers. Sales growth continued in both member and non-member sales in the quarter.

Kathmandu gross margin for the quarter reportedly improved 233 bps y/y, said to be driven by diversification of product mix and further refinement of Kathmandu’s markdown management strategy. Third quarter gross margin improved 257 bps compared to the fiscal first half.

Oboz
Total sales declined 8.9 percent in fiscal Q3, said to be impacted by wholesale shipment timing. The second quarter of fiscal 2026 benefited from earlier shipments of third-quarter season styles to fulfill accelerated demand and meet expanded partner door growth. Sales are anticipated to return to year-over-year growth fiscal Q4, driven by continued online growth and flow of new product launches. Online performance accelerated 19.3 percent y/y in Q3 FY26, following a Shopify launch.

Gross margin for Q3 improved 374 bps y/y, reflecting actions taken to offset the U.S. tariffs, and cycling specific clearance of inventory in the prior year. Third quarter gross margin improved by 570 bps compared to the fiscal first half.

Outlook
KMD Brands said, “The Group remains alert to the risks associated with the current geo-political tensions. The likely increase in the cost of living in the markets where KMD Brands currently operates, coupled with  interest rate increases, can have a strong influence on consumers’ discretionary spending patterns, which can directly impact Group sales. Defending significant market share gains in a more competitive North American marketplace remains a priority for Rip Curl in the fourth quarter.

“The Group anticipates gross margin benefit from net tariff receivables of approximately NZ$5.0 million submitted in North America awaiting formal acceptance by authorities.

“Despite the challenging consumer environment, the Group remains on track to deliver NZ$27.5 million cost savings in FY26 and subsequently deliver operating expenses broadly flat YOY on a constant currency basis (before any FY26 management incentives). The YOY impact of global currency fluctuation is expected to have a significant impact on underlying operating expenses.”

Image courtesy Kathmandu/KMD Brands