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KMD Brands 1H FY24 Preliminary Results
KMD Brands provided the following preliminary update for the half year ended 31 January 2024.
Group sales are expected to be approximately $469 million, 14.5% below last year reflecting ongoing weakness in consumer sentiment. Within this total Rip Curl was down 9.2 %, Kathmandu down 21.5% and Oboz down 20%. The Groups gross margin remains resilient at 58.8% despite the realised US dollar hedged rate in 1H being down approximately 7% from the prior comparative period. Operating costs are $16 million below last year, despite continued inflationary pressures. All brands continue to actively manage costs in a challenging consumer environment. Group inventory at 31 January 2024 is $5 million lower than last January, and net working capital is $18 million lower than last January despite lower sales. Group underlying 1H FY24 EBITDA2 is expected to be in the range of $14 million to $16 million.
Group CEO & Managing Director Michael Daly said: “It has been a challenging start to the year, as consumer sentiment continued to weaken. Rip Curl and Oboz are cycling record sales last financial year, and while revenues from the direct-to-consumer channel for these brands are showing single digit declines (-4.4%), the wholesale channel has been more challenging (-16.8%) as wholesale accounts reduce inventory holdings. We expect this inventory reduction cycle to end this financial year giving us a more positive FY25 outlook in the wholesale channel.”
“Kathmandu has experienced softer trading results since June 2023. A combination of weaker consumer sentiment, the warmest winter on record in Australia and the brand’s reliance on winter weight product has resulted in a disappointing first half. We expect to see signs of improvement in the second half and into FY25 as we launch new innovative products, quick to market programmes, elevated visual merchandising, increased personalisation through the recently released “Out There Rewards” and an expanded third-party brand strategy. Improvement in Kathmandu’s sales performance remains an immediate priority as we approach the key winter trading period.” “The whole KMD Brands team is focused on delivering sales improvement, optimising gross margin, controlling operating costs and reducing net working capital”
