five months to December 2025, group sales at KMD Brands rose 7.9 per cent, but the real standout was Kathmandu. The outdoor wear brand delivered a 12.9 per cent lift in sales over the period, outpacing sister brands Rip Curl, up 5.6 per cent, and Oboz, up 4.5 per cent. Same-store sales at Kathmandu, including online, climbed 12.7 per cent for the 23 weeks to 4 January 2026, with momentum across both Australia and New Zealand. Rip Curl, by comparison, posted a more modest 1.7 per cent increase in same-store sales over the same period, albeit with strong results in North America. Oboz, KMD’s smallest brand focused on wholesale, saw a slower start but finished the year with a sharp acceleration, moving from a 1.3 per cent decline in the three months to October to 21 per cent growth in November and December. In a tough discretionary market, those numbers position Kathmandu as the clear engine of group performance. The sales lift is flowing through to earnings, even as KMD leans on promotions to clear aged stock. The group expects first-half underlying EBITDA of between NZ$8 million and NZ$11 million, more than double the NZ$3.9 million recorded a year earlier. That implies a potential 105 to 182 per cent increase in earnings, despite group gross margin running about 100 basis points lower year-on-year at 56.7 per cent due to heavy discounting. Next Level: cost reset and brand focus These green shoots sit against the backdrop of a broader transformation. In September 2025, KMD unveiled its “Next Level” strategy, a group-wide reset aimed at unlocking the full potential of Kathmandu, Rip Curl and Oboz by tightening brand focus, simplifying the store network and rebuilding its product engine. The plan includes at least NZ$25 million in cost savings driven by an organisational restructure and a review of the global store fleet, with 21 stores slated to close as KMD chases better returns from its physical footprint. Group CEO and managing director Brent Scrimshaw has framed the strategy as a shift to a brand- and product-led growth agenda anchored in an integrated marketplace vision for each label. For Kathmandu, that means an accelerated product roadmap, a reset of international operations and a renewed emphasis on technical performance and design. Rip Curl is being sharpened around youthful energy, simplified ranges and stronger digital channels, while Oboz is targeting faster-moving categories and a more diversified channel mix. On the retail side, KMD is re-energising Kathmandu’s presence with three “concept stores of the future” planned across Australia and New Zealand, designed to elevate brand storytelling and deliver more tailored, experience-led environments. At the same time, the group is accelerating its ecommerce rollout, investing in digital marketing and building new data and supply chain capabilities to support more disciplined, data-led decisions. Scrimshaw says the early trading results suggest the strategy is starting to land. “We are pleased with the Group’s early progress in the execution of its Next Level transformation strategy, in particular trading over the critical Black Friday and Christmas periods,” he said in the latest update. “Whilst we are still at the early stages of our transformation, we are encouraged by the improved performance of Kathmandu, with an adjusted flow of fresh innovation planned in the second half which we believe will strengthen our ability to expand gross margin over time.” Clearing inventory while protecting the balance sheet Like many apparel players, KMD is still working through aged inventory and a highly promotional market. Management has been clear that all three brands remain focused on mixing and selling through older stock, a factor contributing to both the sales uplift and the temporary margin squeeze. The bet is that as the product reset takes hold and fresher, more sharply edited ranges land in store, the group will be able to pull back on discounting and rebuild gross margin. On the balance sheet side, KMD has moved early to de-risk its position. The group has extended the term of its existing debt facilities to April 2027 and adjusted fixed-charge cover covenants for the July 2026 and January 2027 test periods, securing more breathing room as the turnaround plays out. Total syndicated bank facilities have been reduced to roughly NZ$283 million, and the company expects to comply with all amended covenants at the January 2026 measurement point. Net debt at 31 January 2026 is forecast to sit between NZ$85 million and NZ$90 million, up from NZ$76.2 million a year earlier, with the increase largely attributed to a weaker New Zealand dollar.  Early but encouraging signs Taken together, the sales rebound, earnings guidance and balance sheet moves point to a turnaround that is still in its early chapters but heading in the right direction. Kathmandu’s near-13 per cent sales growth and double-digit same-store gains show that brand-level changes are resonating with consumers in core markets, even as the group leans on promotions to reset its inventory base. The cost reset, store rationalisation and product focus embedded in its “Next Level” strategy are beginning to show up in the numbers, with the potential for further upside if KMD can deliver on its promise of “fresh innovation” and more disciplined full-price sell-through in the second half. With first-half results due on 25 March, investors and industry watchers will soon get a clearer read on just how durable this momentum is – and whether KMD Brands truly has its turnaround on a higher plateau, or is simply enjoying a well-timed bounce.