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Kathmandu profit plummets as customers stay inside

Kathmandu has been severely impacted by the Covid-19, with group underlying net profit tumbling 44.5 per cent to $29 million excluding one off costs.

Lockdown restrictions enacted during FY20 hit many clothing retailers hard, and Kathmandu is no exception.

However, group sales grew 48.7 per cent to $742.7 million, driven by the input of the recently acquired surf brand Rip Curl.

“Obvioulsy we’ve been significantly impacted by Covid,” chief executive officer Xavier Simonet said. “[However], online has surged and has continued to be strong, which has been great because of the investments we’ve made.”

And according to Simonet the business has seen a strong recovery after lockdown restrictions ease, as customers look to the outdoors for entertainment after weeks of being stuck inside.

“Our brands are well positioned [as] people are going to be focused on fitness, health and wellbeing, because Covid-19 has had such an impact on people’s lives that people want to go to the outdoors… and that will define Kathmandu and Rip Curl [next year].”

In the last few years Kathmandu has acquired both footwear business Oboz and surf brand Rip Curl when the opportunity arose, and where the synergy made sense.

And, with Covid-19 having had a major impact on the clothing industry generally, Simonet wouldn’t rule out the potential of acquiring more businesses – though did note that the current focus is on strengthening its current brands.

“We don’t have a M&A strategy, it’s opportunistic. So we’ll continue focusing on the current brands, and we’ll see how it goes,” Simonet said.

“Obviously Covid-19 creates challenges, but also opportunities, and that’s why we’re going to continue to focus on our strategy of brand differentiation and product innovation. We’ve got three great brands that answer the needs of different customers in an area, the outdoors, which we believe is going to grow structurally post-Covid.

“We’re going to focus on online and digital innovation… and we’re going to specifically focus on personalization and data analytics to understand our customers better.”

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