KMD Brands expects higher sales and earnings in FY26, with strong momentum at Kathmandu offsetting softer trading at Rip Curl.

The retailer forecasts group sales of $863.2 million to $866.5 million, up 5 per cent from last year, while underlying EBITDA (earnings before interest, taxes, depreciation and amortisation) is expected to more than double to $31.5 million to $34 million.

Kathmandu continued to outperform in the second half, with direct-to-consumer same-store sales, including online, rising 4.8 per cent in the 24 weeks to July 19.

Demand for rainwear, fleece, and base layers was said to remain strong, although sales of insulated products were affected by an “unseasonably warm winter” on Australia’s east coast. Trading in New Zealand also outperformed Australia.

In contrast, Rip Curl’s same-store sales dropped by 2.8 per cent, reflecting weaker consumer demand, increased promotional activity, and a smaller benefit from favourable foreign exchange movements.

Meanwhile, Oboz returned to year-on-year sales growth in the fourth quarter, supported by online demand and new product launches.

Separately, the company will also divest its manufacturing facility in Thailand, with production to be phased out over the next 12 months.

The sale is expected to generate $4.2 million to $5.8 million in net property proceeds and release around $5 million in working capital, strengthening the group’s balance sheet.

• Further reading: Cost cuts, concept stores and Kathmandu: Inside KMD Brands’ turnaround.