Kathmandu delivers $10m profit - but where was NZ?
Retailer Kathmandu has posted a $10 million profit for the first half of the financial year but its New Zealand stores performed more poorly than expected.
Sales across the group were up 0.2 per cent compared to the same time a year earlier but Australia posted a 6 per cent increase. New Zealand sales were up just under 1 per cent.
Retail consultant Chris Wilkinson, of First Retail Group, said that result was surprising given the buoyancy in other retail sectors in this country.
"The local outdoor market is fairly saturated and moves by other sport and recreational retailers into wider ranges of apparel may have a lot to do with this," he said.
"Same store sales growth in Australia was a good win, as the market there for many large retail groups continues to be challenging with restrained consumer spending."
Wilkinson said Kathmandu had last year been hampered by too much stock having been left over from earlier seasons.
"This has a triple-edged effect. Cost of holding that stock is one, however consumers tire of the same ranges - which can impact confidence. The third aspect is that staff also lose motivation when they don't see change and realise product needs to be quit - affecting sell through. Fresh ranges stimulate consumers - and those selling the products, which seems to have at least help them hold sales position in New Zealand and lift in Australia."
Operating expenses dropped, although the group is paying higher rents at its new Australian distribution centre and New Zealand support office.
Its total operating expenses are now just under 51 per cent of sales.
The chain opened two new Australian stores in the half, refurbished two and closed one, finishing the quarter with 114.
Online sales grew 18 per cent to 7.4 per cent of total turnover. Kathmandu said it had identified that international growth would come from online channels and wholesale deals. It is working through closure of its British stores.