Kathmandu’s profit expectations jump

Kathmandu 2Outdoor clothing retailer, Kathmandu, says it is expecting an annual profit increase of about 67 per cent, between $33 million to $34 million, for the year ending July 31, compared to the previous year’s $20.4 million.

The Christchurch-based company also reported an EBIT update between $50 million to $51 million, up from the previous year’s $33.2 million.

Xavier Simonet, Kathmandu’s CEO, said as indicated in their June update, product newness and careful management of promotional activity have resulted in a better than expected gross margin for FY2016.

“Continued realisation of cost efficiencies and improved working capital management has contributed to an improved FY2016 profit outcome and generated strong operating cash flows,” Simonet said.

The company’s total sales for the year ending July 31 is $425.5 million, up $16.2 million (four per cent) from the previous corresponding period. Same store sales for the 52 weeks ending July 31 is up 1.6 per cent at constant exchange rates.

“The sales pattern during our Winter campaign changed this year with sales happening earlier in the campaign at a higher gross margin,” Simonet said.

Kathmandu’s annual profit halved last year as a build-up of inventory forced it into aggressive discounting at lower margins to rid itself of excess stock.

Under the management of Simonet, who was appointed to the role in January 2015, the company is taking a more cautious approach to sales and keeping expenses under control.

Kathmandu will release full results for the year on September 21.

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