Kathmandu sets brisk pace

ALAN WOOD
Last updated 05:00 25/03/2014

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Outdoor equipment retailer Kathmandu Holdings has bucked the trend among some listed retailers, with its shares rising on a strong first-half result.

Kathmandu is continuing to make an aggressive push into the Australian market with its plans to open new stores but also upscaling its online strategy backed by millions of dollars of investment.

Chief executive Peter Halkett said the company was targeting an improved profit in 2014, after adjusting for exchange rates.

The NZX and ASX-listed firm reported an $11.4 million half-year profit yesterday, up 10.7 per cent on the $10.3m net profit for the six months to January 31, 2013.

Shares closed 28 cents or 8.4 per cent higher at $3.62.

Grant Williamson, director of brokerage Hamilton Hindin Greene, said the shares had regained ground lost in recent weeks. Kathmandu outperformed Postie Plus, Pumpkin Patch, Hallenstein Glasson, "and even The Warehouse [result] was nothing too exciting".

"A lot of retailers have probably disappointed the market in recent weeks. However, Kathmandu just continues to perform extremely well."

He said investors would see it as a fantastic result, given the weakness of the Australian dollar.

Kathmandu said it continued to target opening 15 new permanent stores in the full financial year, having opened five stores in the first half, including one in New Zealand at St Lukes in Auckland.

By the end of January it had 139 outlets in the group, up from 129 a year earlier.

Halkett said the company was extending its target of stores in New Zealand and Australia, to 180 up from 170 previously. It was being helped by a "small-format" strategy allowing it to roll out new outlets in regional towns.

"Well over $5m" of online investment was planned over the next couple of years. Also, Kathmandu had doubled its "information technology" spend in the first half to $4m. Online sales made up 4.7 per cent of total sales.

"We've increased sales 49 per cent over the previous period . . . it's an area where there's a lot of talk but it takes money and capability," Halkett said.

"The other thing we're doing which is really about the UK . . . is we're looking at market-based sites. We're already on Amazon, we're on the Next website and that's been very successful for us, we're going on to eBay."

The United Kingdom would be a beach-head for the company's international sales strategy.

Kathmandu was continuing to invest in distribution, with further "40 per cent" expansion of a half-hectare warehouse that was first opened in mid-2012. The site enables Kathmandu's strategy to ship some goods internationally.

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"We've just laid the foundations so the project has got nine months to run," chief financial officer Mark Todd said.

- BusinessDay

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