Sales reached NZ$384.0 million ($315 mm), up 10.6 percent from fiscal 2012. For the full year same store sales growth was 5.6 percent at comparable exchange rates (1.8 percent at actual exchange rates). The company opened 17 new permanent stores, eight of these in the second half. Online sales growth of 55 percent contributed over 4 percent of total sales.
“This was a good result given the difficult retail environment,” said CEO Peter Halkett, referring to Australia's 0.5 to 0.6 percent GDP growth during the first six months of calendar 2013. “It was pleasing to achieve positive same store sales growth over the year. Operating expenses reduced as a percentage of sales compared to FY2012, which also contributed to earnings growth.”
Gross profit margin remained within Kathmandu’s target range of 62 percent to 64 percent. Margins were slightly reduced in Australia (down 60 bps) and marginally improved in New Zealand (up 10bps). Margins in the United Kingdom were lower than FY2012 by 200 bps due to the impact of clearance activity associated with store closures.
Kathmandu’s operating expenses decreased by 30 bps as a percentage of sales. Expenses in the second half year were consistent with the prior comparable period as a percentage of sales. Although retail rent increased as a percentage of sales, this was offset by leverage achieved in warehouse and office rent costs, and the effect of exchange rate translation.
Advertising and distribution costs reduced as a percentage of sales, whilst operating costs related to sales activity, both retail and online, increased due to continuing growth in the Australian domiciled portion of the total business.
“We were successful in reducing operating costs as a percentage of sales. This continues to be a key priority and we are confident Kathmandu will achieve further efficiency improvements in the future” said Mr. Halkett.
Earnings before interest and tax (EBIT) reached NZ$63.4 million ($52 mm), up 11.2 percent compared with fiscal 2012. EBIT margin increased from 16.4 percent to 16.5 percent of sales..
The decrease in capital expenditure year on year was a combination of timing, with $2.2m of spend relating to store projects completed in FY2013 occurring in FY2012, and efficiency improvements in a store rollout program. In addition to the 17 permanent new stores opened in FY2013, eight stores were relocated or refurbished during the period. Other capital investment included reconfiguration of the Australian distribution centre and the first modules of our new retail systems platform.
Total inventories increased increased 9.1 percent to $6.7m ($5.5 mm), with early timing of summer season deliveries contributing $2.5m of this increase.
Total net debt as of July 31 decreased by 22.5 percent on the previous year as a result of increased operating cash flow and reduced capital expenditure. The ratio of net debt to net debt plus equity at July 31 decreased to 12.0 percent.
Sales, gross profit and EBITDA growth rates slowed from double-digit to single-digit pace in the back half of the year.
Halkett confirmed Kathmandu’s overall key growth strategies remain consistent.
“We will continue to invest in our store network through opening new stores and relocating or refurbishing existing stores in Australia and New Zealand,” he said, noting that plans call for 15 new stores in fiscal 2014. “Maximizing the return on the investment made in inventory and store space remains a key focus while continuing to effectively manage operating costs. Kathmandu will continue to invest in systems infrastructure to grow our online sales, given the opportunity presented by this channel.” He concluded by saying that “providing there is no deterioration in economic conditions, Kathmandu expects another solid performance in FY2014.”
About Kathmandu Holding Ltd:
In 1987 Kathmandu’s first store opened in Hardware Lane in central Melbourne, followed by its first New Zealand store in Christchurch in 1991. Throughout the nineties Kathmandu remained a small specialist outdoor retailer. However, enthusiasm for the company’s innovative products was clearly growing, leading to the launch of the Summit Club loyalty program in 1994.
Kathmandu has now grown to become a leading international retailer of clothing and equipment for travel and adventure. Over 1500 team members now work in over a hundred stores, distribution centres and offices spread throughout Australia, New Zealand and the UK. In November 2009, Kathmandu became a publicly listed business on the Australia and New Zealand Stock Exchanges.
Throughout its journey, Kathmandu has never lost sight of its origins. The focus is still on creating quality products that make the outdoors more accessible to adventurers of every description. To this day, about 95% of sales are Kathmandu-branded products, using materials and designs sourced or specified by our talented in-house design team.
By press release through Sportsonesource
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