Warm winter cools Kathmandu profits
An unusually warm winter has hurt profits for Kathmandu, but late-season cold snaps have allowed the outdoor clothing retailer to recover some sales revenues.
Kathmandu said today it would report slightly higher sales, but a lower profit for this financial year to July 31 compared to the last financial year.
Net profits for the year are expected to be between $39.5 million and $42.5m, compared to $44.2m for the previous year.
Total sales for the company were $392.9m, up $8.9m or 2.3 per cent on the previous year, it reported today.
Kathmandu had advised in June that earnings for the year would likely be down between 10 per cent and 15 per cent, thanks to an unseasonably warm July.
But a drop in temperatures across New Zealand and Australia in July meant the company was able to claw back sales, and "recovered a significant portion of the shortfall in sales revenue it experienced in the early part of winter".
Kathmandu chief executive Peter Halkett said "it is pleasing to have delivered a better full-year result . . . than we were anticipating a few weeks ago when warm winter weather had significantly reduced customer demand.
"The improvement in sales and earnings in July once colder winter weather became established has resulted in a satisfactory outcome from our key winter sale event."
Investors will be watching further announcements, after the company was caught in a "spiral" of price discounting this year.
After the June profit warning Kathmandu's share price slumped by 15 per cent, wiping $100m from the company's capitalisation.
The company's earnings before interest and tax were expected to be between $62.5m and $65.5m, compared to $63.4m for the previous year.
The NZX-listed company's share price was $3.50 in morning trade today, up 17 cents or 5 per cent.
The full-year result for the company will be released in September.