KMD Brands Ltd. (Group), owner of the Rip Curl, Oboz Footwear and Kathamandu active lifestyle brands, is reporting that Kathmandu has led the Group sales momentum in the first half of fiscal 2026. Total Group sales increased 7.3 percent year-over-year to NZ$505.4 million (~$294 mm) for the six-month period ended January 31, 2026. The company said the sales result was “underpinned” by solid growth in both the direct-to-consumer (DTC) and Wholesale channels.

KMD Brands reports in the New Zealand dollar (NZ$) currency and may at times refer to amount in Australian dollars (A$) currency for dividend purposes. This report provides conversions to U.S. dollar ($) currency based on an average exchange rate of 1 NZ$ to 0.581 US$ as provided by the Group in its reporting for the first half 2026 period.

Consolidated gross margin decreased 120 basis points y/y to 56.8 percent of net sales. In a promotional marketplace, KMD said the brands “balanced sales growth with gross margin achievement, while optimizing inventory composition and selling through aged inventory.”

Underlying operating expenses were said to be lower than last year on a constant-currency basis, with a Next Level cost reset helping to offset strategic growth investments and continued global cost pressure.

Underlying EBITDA amounted to NZ11.5 million (~$6.7 mm) in the first half (H1) period, compared to NZ$3.9 million in the prior-year H1 period.

Net Profit (Loss) After Tax (NPAT) was a loss of NZ11.5 million (~$6.7 mm) on an Underlying basis, compared to a loss of NZ16.1 million in the 2025 H1 period.

Rip Curl

Rip Curl total sales increased 4.6 percent y/y to NZ$291.4 million (~$169 mm), reportedly helped by the year-over-year movement in FX rates used to convert global sales to NZ$ reporting currency. On a constant-currency basis, Rip Curl’s total sales were up 0.3 percent versus first half of last year.

Wholesale sales increased by 9.8 percent y/y, supported by strong demand in Europe and North America.

DTC total sales (including online) increased 1.9 percent y/y in the first half, with strong sales in North America offsetting a challenging market during the southern hemisphere peak summer period. Online sales increased 6.7 percent to NZ$22.5 million (~$13 mm), comprising 12.0 percent of DTC sales.

DTC same-store sales – comprising owned-retail stores and online – increased 1.5 percent y/y in the H1 period.

RC gross margin decreased 120 basis points y/y, reportedly impacted by “Wholesale channel mix and elevated promotional activity.” Underlying operating expenses were said to be in line with last year on a constant-currency
basis, with “a strategic cost reset helping to offset strategic growth investments and continued global cost pressures.”

Kathmandu

Kathmandu total sales increased by 12.3 percent y/y to NZ$176.1 million (~$102 mm) in the first half, despite a net reduction of four stores versus the prior year. Kathmandu reportedly showed strong sales momentum throughout the first half after improving 2.5 percent y/y in the fourth quarter of last year.

Strong sales results were achieved in both Australia (+10.2 percent y/y) and New Zealand (+8.9 percent y/y).

Same-store sales in Australia are for the 27 full weeks ended February 1, 2026 and are measured at constant exchange (ce) rates.

Sales growth reportedly continued through the second quarter, with “the key Black Friday and Christmas trading
periods cycling a good result last year.”

Online sales were said to be in line with last year – and cycling strong growth – at NZ$20.6 million (~$12 mm), comprising 11.8 percent of DTC sales.

Same-store sales (including online) increased by 12.8 percent y/y. Same-store sales in Australia are for the 27 full weeks ended February 1, 2026 and are measured at constant exchange (ce) rates.

Gross margin decreased by 150 basis points y/y, with the company focused on selling through aged inventory in the first quarter, and “maintaining competitive promotional intensity through the second quarter.”

Total inventory was NZ$9.8 million at H1-end, NZ$13.5 million lower than last year at constant-currency terms.

Underlying operating expenses were reduced year-over-year, resulting in improved operating leverage following a “strategic cost reset and ongoing cost discipline.”

Oboz

Total sales increased by 6.5 percent y/y to NZ$38.0 million (~$22 mm) in the first half.

Online sales increased 0.9 percent y/y, said to be impacted by lower closeout inventory levels this year. In the second half, the brand’s website will move onto the group online trading platform. Digital marketing continues to be refined with new agency partners through an updated digital funnel strategy and fresh creative.

Wholesale sales increased 7.5 percent y/y with strong in-season buying from key accounts.

Gross margin remained stable, improving 20 basis points y/y despite tariff impacts, and supported by lower closeout activity.

Underlying operating expenses were said to be “tightly controlled and lower than last year.”

Balance Sheet Summary
Net working capital remains a key focus for the Group, ending the first half $13.4 million lower than the close of H1 last year. The Group inventory balance was reduced for the third successive year, decreasing $29.6 million y/y, with a continued focus by all brands to optimize mix and sell through aged inventory.

The Group had a net debt position of NZ$94.0 million at period-end, impacted by NZ$5.6 million with the weakening of the NZ dollar year-over-year. The Group complies with all amended bank covenants at January 31, 2026.

Refinance
On January 30, 2026 the Group extended its existing debt facility term and adjusted the fixed charge cover ratio for the July 2026 and January 2027 measurement periods.

The Group also reduced its total syndicated bank facilities by NZ$49 million to approximately NZ$283 million, consisting of an A$207 million and NZ$43 million multi-currency revolving facility.

As part of a longer-term refinance plan, the Group has now secured a refinanced debt facility, provided by a majority of the existing banking syndicate for a new multi-year bank debt facility with an ~NZ$205 million capacity. The refinanced facility provides KMD with a stable, long-term capital structure that, in combination with the proceeds from the equity raising, is expected to provide sufficient liquidity to execute on the Next Level transformation and fund working capital requirements.

The new facility term of up to 2.5 years provides the Group with funding stability through to October 1, 2028, removing near-term refinancing pressures and allowing management to remain focused on strategic execution and delivery of shareholder value.

The refinanced facility structure includes fixed charge cover ratio and leverage covenant arrangements for the Group over the term of the facility. The facility provides KMD with operational flexibility as it continues to execute its strategy and further reduce leverage over the longer-term to a ratio of <0.5x Net Debt/EBITDA.

In connection with the refinance, KMD is undertaking an equity raise.

Placement and Institutional Entitlement Offer
The company’s Placement and Institutional Entitlement Offer closed on Wednesday, April 1, 2026 and raised combined gross proceeds of approximately $44.2 million through the issue of new fully paid ordinary shares in KMD (New Shares). See link at bottom for additional information on this action.

Second Half Trading Update
DTC same-store sales (including online) for the first six full weeks of the second half from Monday, February 2 to Sunday, March 15, 2026 in a seasonally non-significant trading period:

  • Kathmandu +11.1 percent y/y, combined with gross margin improvement of ~50 basis points y/y.
  • Rip Curl +1.2 percent y/y

Outlook
Given early momentum in its Next Level turnaround strategy and despite a challenging global consumer operating environment, the Group remains focused on delivering continued performance improvement compared to prior year.

Kathmandu continued its recent sales momentum in the first 6 weeks of 2H FY26, with the key Autumn and Winter trading periods still to come. Kathmandu is also said to be on track to achieve gross margin expansion y/y in the second half, with consumers responding positively to improved product flow and assortment.

Rip Curl and Oboz wholesale order books for second half FY26 are in line with last year, with the Europe and North America summer season to come.

Consolidated gross margin expansion is anticipated y/y in H2 FY26, reflecting actions taken to offset the U.S. tariffs, and cycling specific clearance of inventory in the second half of last year.

Group underlying operating expenses as a percent of sales are forecasted to improve y/y, showing progress towards mid-term targets. Underlying operating expenses for the full year are planned to be broadly flat y/y on a constant-currency basis (before any FY26 management incentives). The year-over-year impact of global currency fluctuation is expected to have a significant impact on underlying operating expenses.

The Group said it remains on track to achieve its Next Level strategic cost reset savings, helping to offset cost inflation, and deliver moderated reinvestment to drive Next Level strategic growth opportunities.

KMD Brands expects to deliver further EBITDA margin expansion in FY26.

The Group said it continues to focus on the optimization of its store network as part of the Next Level integrated marketplace strategy. Capital expenditure for FY26 is targeted to be at the lower end of the guided range (approximately NZ$25 million).

KMD Brands continues to target a leverage ratio of <0.5x Net Debt / EBITDA by end of FY27.

Image courtesy Kathamndu/KMD Grands Ltd

EXEC: Rip Curl and Oboz Parent KMD Brands Completes Placement