In the early trade today, Kathmandu Holdings shares rushed to hit the gravity after the company unleashed its lower than expected results for the 22 weeks ended 30 December 2018.
Consumer discretionary company Kathmandu Holdings Limited (ASX: KMD) came up with the trading update today along with its 1H FY19 profit guidance for the half year ending 31 January 2019. After the completion of the first 15 weeks of the fiscal year 2019, the company anticipated earning strong profits significantly based on the success of summer sale. But in contradiction to its expectation, Kathmandu Holdings’ New Zealand and Australia sales during December landed up below the company’s guidance and previous corresponding period.
It outlines the decline of 1.0% in the same store sales for the 22 weeks to 30 December 2018, including the decrease of 0.2% in Australia and 2.4% in New Zealand compared to the prior period. Whereas the retail gross margins have shown an improvement of 60bps to approximately 64%, partially offsetting the lower than anticipated sales.
Chief Executive Officer of Kathmandu Holdings, Xavier Simonet stated, The company is disappointed with the trade it has witnessed over the Christmas and Boxing Day period in Australia and New Zealand. Mr. Simonet added, Following strong same store sales growth in first quarter, the company was expecting higher sales, but it got smashed during December. However, the company has experienced the improvement in retail gross margin and continuing substantial growth from the recently acquired Ob?z business.
Now looking into the full half year of FY2019, Kathmandu Holdings expects its Ob?z sales to grow by approximately 35% to NZ$27.5 million with the gross margin of circa 40%. Moreover, the company remains positive for the first half of Fiscal 2019, as the total Group’s profits are now expected to go up 4%-8% compared to 1H FY2018.
For Fiscal 2018, the company posted 4.4% growth in same store sales that had reflected a negative change of 0.8% in the sales growth of 1H FY2018. The overall net profit after tax of the company reached NZD$50.5 million in FY18, up 32.9% compared to FY17’s profit of NSD$38.0 million.
The company further targets to expand its footprints in North America and Europe through its recent acquisition of a US-based outdoor footwear wholesaler, Ob?z. The senior management believes that Ob?z will equip the opportunity to boost the company’s international growth. Further, the full results for the half year of Kathmandu are expected to be out on Tuesday 26 March 2019.
In today’s trading session, Kathmandu Holdings’ stock has been smashed by 15.267% to trade at $2.220 as at 3 January 2019 (12:38 PM AEST). The stock is currently trading at a PE of 11.930 x with a market capitalization of $592.61 million.
Looking at the past performance, KMD has witnessed a substantial growth of 23.58% over the past 12 months. But in the last one month, its daily price movement has dipped slightly by 1.13%.
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