Kathmandu holds nerve on prices and profits rise, despite slower sales uplift

By

Sandra Halliday

Published
Jan 24, 2018

Outdoor and active gear specialist Kathmandu had a good Christmas and it expects its first half profit to soar by at least 20% as a result of that.

The Australia/New Zealand dual-listed company, is largely focused on its local market, but also sells in the UK. It s targeting profits of A$12 million or more with its final results due on March 20. 

The increase will come after a sales rise to A$204 million from A$196.3 million a year ago. But the figures aren’t an undiluted tale of retail strength as the firm’s comparable store sales fell 0.8% in the 25 week-period ending January 21. That was caused by weakness in one of its core markets as New Zealand comps fell by 6.4%. However, Australian comps were up 1.9%.

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Yet even though New Zealand comp sales fell, the company has clearly held its nerve and chose to maintain prices rather than chasing sales at any cost.

CEO Xavier Simonet said in a stock exchange statement: “Striking the right balance in the key Christmas trading period between generating sales growth and improving our gross margin has fuelled healthy earnings growth. We have also continued to strengthen our balance sheet position during the first half.”