KMD Brands has confirmed the commencement of a full-scale review of its business amid a long period of financial turnaround, while also managing to increase sales across its brands.

Now, it’s looking towards the future, one which could have a new-look portfolio for the group.

The owner of Kathmandu, Rip Curl, and Oboz reported a 5.2 per cent increase in sales for its fiscal third quarter from the previous year. This figure was led by Kathmandu’s strong, 12 per cent uplift.

KMD has managed to lift its gross profit margin to 58.2 per cent, a 258 basis point increase year-on-year. Kathmandu reduced its net store count by seven throughout the quarter; the group said that in-store sales momentum at Rip Curl had softened since the beginning of the Middle East conflict. 

The results come after the group enlisted Goldman Sachs to undertake an equity raise, a process which saw a six-day delay in the release of its half-year earnings report, a $65.5 million sale of shares at a 70 per cent discount, and the resignation of its then chair, David Kirk.

“It’s pleasing to see momentum building in our next-level execution. Despite challenging broader market conditions, the group has continued to deliver encouraging progress in Q3, balancing sales execution and gross margin expansion together with operational and cost discipline,” Brent Scrimshaw, CEO and MD of KMD Brands, said.

In March, the group also rejected a demerger offer for its Rip Curl brand from US-based surf retailer Stokehouse on the grounds that it had “limited scale and profitability”.

“Nine months into the first year of execution, our transformation strategy is demonstrating that we are building a stronger, deeply connected and more resilient business, while remaining on track to achieve our medium-term targets,” Scrimshaw added.

This transformation strategy is continuing to review whether stores in its network are meeting internal profitability targets, with a focus on optimising its portfolio towards attractive shopping locations.

Going forward, the group announced a business review with the intent of “improving returns for shareholders”. This review will look at KMD’s capital structure, its portfolio, and “other value-creation opportunities”. 

“Our commitment to creating long-term value for shareholders is the board’s clear priority,” Philip Bowman, chair of KMD Brands, said.

“In parallel with our focus on improving KMD Brands’ operating performance, this business review is an appropriate next step at this time.”