On a Wednesday morning in Sydney, the shares of KMD Brands, the company behind Rip Curl and Kathmandu, slid to their lowest level since the early pandemic months of April 2020. The cause was a trading update showing sales down 12.5 per cent over the first four months of the financial year, a reminder that even well-known brands are not immune when households tighten their belts and the weather refuses to cooperate. Kathmandu, the outdoor gear label that had surged during the previous year, bore the heaviest weight of the decline. Investors weighed that falling volume against a welcome sign of
KMD Brands Shares Hit 3.5-Year Low as Kathmandu and Rip Curl Owner Sales Fall 12.5%
A 71.7 per cent surge last year, then a 21.6 per cent slide
Mark
Let's start with the headline number. Sales down 12.5 per cent, and the shares fall 11.2 per cent. Why does the market punish this so hard?
Mimi
Because it's a four-month figure covering the start of the year, and Kathmandu fell 21.6 per cent inside it. Wholesale orders drying up is also not a one-off weather problem.
Luke
Careful there. The reporting says wholesale orders dried up, but it doesn't give a number for that, so we can't say how large or how lasting it is.
Mark
What about the weather explanation? Warm conditions hurting rainwear and puffer jackets sounds tidy.
Mimi
It's the company's explanation, alongside weak consumer sentiment and Black Friday. It makes sense for those product lines specifically.
Luke
Right, but it's attributed to KMD. The reporting doesn't separate how much of the drop is weather and how much is shoppers spending less.
Mark
Kathmandu's comparison is striking, isn't it? A 71.7 per cent surge last year, then down 21.6.
Mimi
Yes. It was a very high base, so part of the fall is measured against an exceptional period.
Luke
Whether that explains most of the fall is something we don't know. The numbers show the swing, not the cause.
Mark
And the margins?
Mimi
Gross margins improved because costs were tightly controlled. That's the one encouraging thread.
Luke
Improved by how much isn't stated, so I wouldn't lean on it as an offset to the sales decline.
Der Puls
- Shares plunged 11.2 per cent to 67 cents on the ASX, their lowest point in three and a half years.
- Sales for the first four months fell 12.5 per cent, with wholesale orders drying up across retail partners.
- Kathmandu took the hardest hit, with year-to-date sales sliding 21.6 per cent after a surge the year before.
- Unseasonably warm weather left rainwear and puffer jackets unsold, while soft consumer sentiment kept shoppers away.
- CEO Michael Daly has made reviving Kathmandu his top priority, and tighter cost control has lifted gross margins so far.
On a Wednesday morning in Sydney, the shares of KMD Brands, the company behind Rip Curl and Kathmandu, slid to their lowest level since the early pandemic months of April 2020. The cause was a trading update showing sales down 12.5 per cent over the first four months of the financial year, a reminder that even well-known brands are not immune when households tighten their belts and the weather refuses to cooperate. Kathmandu, the outdoor gear label that had surged during the previous year, bore the heaviest weight of the decline. Investors weighed that falling volume against a welcome sign of discipline on costs, and their verdict was sharp.
The news arrived on Wednesday morning in Sydney, when KMD Brands, the company behind Rip Curl and Kathmandu, revealed that its sales for the first four months of the financial year had fallen 12.5 per cent. Investors responded immediately. The shares dropped 11.2 per cent to 67 cents, their lowest since April 2020.
The weakness had several sources. Wholesale customers, the retailers who stock KMD's brands, had largely stopped placing orders. Rainwear and puffer jackets sat unsold because Australia's weather had been unseasonably warm. The company also pointed to fragile consumer confidence and the Black Friday promotional period.
Kathmandu bore the heaviest burden, with year-to-date sales down 21.6 per cent. That fall came after a 71.7 per cent surge in the same period last year, so the brand was measured against an exceptionally strong base. Chief executive Michael Daly has placed reviving Kathmandu at the centre of his agenda.
There was one encouraging note. Stricter control of operating costs lifted gross margins, meaning the company kept more of each sales dollar even as volumes shrank. Whether Kathmandu stabilises, wholesale orders return, and cost discipline can hold up through a difficult season will determine how the story unfolds.
On Wednesday morning in Sydney, shares in KMD Brands, the company behind Rip Curl and Kathmandu, fell 11.2 per cent to 67 cents on the ASX. It was the lowest price the stock had touched since April 2020, a three-and-a-half-year low.
The trigger was a trading update. KMD told the market that sales for the first four months of its financial year, measured to November 30, were 12.5 per cent lower than in the same stretch a year earlier. The company pointed to continuing weakness in consumer sentiment, and to the Black Friday promotional period, as part of the picture.
Two more specific problems sat inside that figure. Orders from wholesale customers, the retailers that stock KMD's brands, had dried up. And sales of rainwear and puffer jackets were weak because the weather in Australia had been unseasonably warm, which left cold-weather and wet-weather gear sitting unsold.
Kathmandu, the outdoor gear brand, took the heaviest hit. Its year-to-date sales slid 21.6 per cent. That decline follows a 71.7 per cent surge at the same point last year, so the brand is now comparing itself against an unusually strong period.
Kathmandu is also where chief executive Michael Daly is concentrating his attention. Improving the brand's sales is his top priority, according to the report.
There was one piece of better news in the update. A tight grip on operating costs helped improve the company's gross margins, which means the business was keeping more of each dollar of sales even as the volume of those sales shrank.
KMD Brands is dual-listed, and the announcement landed on the ASX on Wednesday. The market's reaction, an 11.2 per cent single-day drop, shows how heavily investors weighed the sales decline against the margin improvement.
What to watch next is whether Kathmandu's sales stabilise, whether wholesale orders return, and whether cost discipline can keep supporting margins if the weak consumer mood and warm weather persist.
Bemerkenswerte Zitate
Improving sales at the Kathmandu brand is the top priority.— Michael Daly, KMD Brands chief executive (paraphrased)
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