Kathmandu registers an 85% drop in earnings

Kathmandu Holdings’ earnings fell 85% in its 2020 financial year.

The outdoor clothing and equipment retailer posted a net tax profit of $ 8.9 million in the 12 months through July 31, compared to $ 57.6 million a year earlier. The company said the steep drop in earnings reflected a one-time transaction cost of $ 18 million, a restructuring cost of $ 4.6 million, and an additional lease cost of $ 2.6 million.

Kathmandu group sales increased 48.7 percent to $ 801.5 million in the period, compared to $ 538.8 million a year earlier, and included nine months of earnings from the recently acquired surf brand. Rip Curl.

It published earnings before interest, taxes, depreciation and amortization (ebitda) of 149.8 million dollars, compared to 99.5 million dollars reported in the same period of the previous year.

Kathmandu will not pay a final dividend. The company said that Covid-19 had resulted in a loss of sales of approximately $ 135 million for the group.

The group’s total online sales grew 63 percent to $ 106.4 million in the year, and now account for 15.7 percent of all sales.

Kathmandu’s online sales grew 67 percent to $ 80.9 million in the period, while Rip Curl’s online sales grew 52 percent to $ 25.5 million.

Including online and in-store sales, total group sales increased by 48.7%.

Kathmandu Group CEO Xavier Simonet said fiscal 20 had been a “transformational year” for the company following the Rip Curl acquisition. But the group had exposed the worst part of the Covid-19 pandemic, which had impacted its results.

Despite this, he said the company was in a strong financial position.

“Unfortunately, the group faced significant unexpected challenges with Covid-19 restrictions and shutdowns. We took decisive steps early on to reduce costs, adjust the operating structure of the business, and raise $ 207 million of capital. These initiatives have resulted in a solid healthy inventory balance and level, which positions us well for the future, “Simonet told the NZX.

Following the easing of lockdown restrictions in New Zealand, Australia, Europe and California, the group had seen a strong return in retail sales.

“Both Rip Curl and Kathmandu also enjoyed exceptional performance in post-closing winter sales in Australia and New Zealand,” Simonet said.

The company said that Covid-19 had generated sales losses in the Rip Curl business of around $ 70 million and around $ 15 million in the Oboz business.

The closures had resulted in loss of sales revenue of about $ 50 million from stores in Kathmandu.

Rip Curl’s sales were down 17 percent, but still generated $ 34 million of cash and contributed $ 11.7 million to the group’s underlying EBITDA during the first nine months of ownership.

“Beyond the short-term impacts of the lockdowns, our long-term strategy remains unchanged,” Simonet said.

“Product innovation, brand differentiation, a key focus on sustainability and a sea-change in digital transformation will allow us to continue to respond to the needs of our customers.”