Did Kathmandu Holdings’ (NZX:KMD) Sales Increase Due To Diversification Strategy?

Summary

  • Kathmandu Holdings’ unaudited EBITDA noted more than the previous year.
  • Oboz and Rip Curl drove the sales growth of the Company.
  • Several COVID-19 related restrictions caused businesses loss in the several physical stores of the Company in 2020.

Kathmandu Holdings Limited (NZX:KMD) revealed its unaudited trading update for the period of 6 months closed 31 January 2021. 

The Company is reaping results of its diversification plan, which is reflected in terms of operating profit. There has been growth witnessed in the half- year sales, which shows the efficient incorporation of Rip Curl post its acquisition in 2019. The results further demonstrate the importance of having a long line of brands in a Company’s portfolio.

Source: @Everst|Megapixl.com

There were strong orders witnessed especially in the second half of the year, despite the challenges being faced due to COVID-19, increasing the sales for Rip Curl.

Also Read: Rip Curl Elevates Kathmandu (NZX:KMD) Earnings

Kathmandu’s sale in Oboz was up by 3.8% despite the pandemic, however the Group’s wholesale sales were down by 11.5% on pcp.

Also, the Company’s core strengths of rainwear and insulation clothing wear have witnessed a slump due to travel restrictions towards the Northern Hemisphere where these clothes were particularly required to be worn a lot.

Company Performance

With a generous contribution from Rip Curl, the Group sales for the duration witnessed a 12% rise in 1HFY21 period, whereas the expected EBITDA for the duration is between $47m-$49m. The Group’s capital raising was of $207m during last year and it is anticipated to lead the net debt of the Group to become around $7m.

COVID-19’s Impact on Kathmandu Holdings

The Company bore the brunt of the pandemic like most of its peers worldwide. Fourteen of its stores located in Auckland were shut for a period of 2 weeks, whereas stores in Greater Melbourne area were closed for a period of 11 weeks.

The stores of the Company located in airports were also affected, travel restrictions across the world were the major reason behind it. The stores located in other places such as Bali, Hawaii and parts of Europe were also affected severely due to the pandemic causing losses to the businesses.

Mr. Xavier Simonet, the CEO of the Group is of the view that the improvement witnessed in the performance of the first half is an indication how resilient the Company is and how using various strategies like the acquisitions of Oboz and Rip Curl have done well.

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