Kathmandu expects higher profit

TAMLYN STEWART
Last updated 10:59 01/02/2013

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Kathmandu Holdings says its net profit for the first half of the 2013 financial year could be as much as 75 per cent higher than for the same period last year, on the back of strong sales growth in the first quarter and ''satisfactory'' trading in December and January.

In a trading update issued this morning the outdoor gear retailer estimated net profit for the six months would be in a $9.5 million to $10.5m range, compared to $6m recorded for the same period last year.

The stock lifted 0.9 per cent, or 2 cents on the news, to trade at about $2.23 a share.

The company said total group sales for the half year would be approximately $165.8m, compared to $146.7m in the same period last year, an increase of 13.1 per cent.

Same store sales growth for the 26 weeks ended January 27, 2013 was 6.1 per cent on a constant currency basis.

Given this sales performance, and gross margins which were expected to be similar to the previous year, the retailer forecast earnings before interest, tax, depreciation and amortisation of $20.5m to $21.5m, compared to $17m last year.

Kathmandu chief executive officer Peter Halkett said that the company's trading performance during the key Christmas and January period had been generally in line with management expectations.

"Our sales in Australia have continued to grow at a faster rate than New Zealand, which reflects the continuing strengthening of the Kathmandu brand and market penetration in Australia.''

However Kathmandu's overall profit for the full year was primarily dependent on trading in the second half of the year.

"We continue to expect approximately 60 per cent of sales and 70 per cent or more of earnings to be made in the second half of the financial year, and as our store rollout continues the amount of our sales and earnings that is dependent upon our second half performance, will increase," Halkett said.

"Given this trading pattern and the volatile nature of the retail trading environment, we remain cautious about our full year result. In accordance with our normal practice, we will not be providing full year earnings guidance."

Kathmandu has opened nine new stores so far in the 2013 financial year and expects to open 15 new stores in this financial year. Kathmandu's full result for the half year will be released on March 26.

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- © Fairfax NZ News

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