Kathmandu shares slump to 2 1/2 year low on profit warning

Monday 2nd February 2015

Kathmandu Holdings stock slumped 18 percent to a two and a half year low after the outdoor goods retailer said Christmas and January trading lagged behind expectations, resulting in a first half loss.

The loss was $1-$2 million in the 26 weeks ended Jan. 25, compared with a profit of $11.4 million in the same period a year earlier, the Christchurch based company said in a statement. First half sales rose 6.9 percent to $179.2 million.

Kathmandu's earnings lagged its expectations during the first half of its financial year after it discounted prices to clear out excess stock, particularly in Australia, which hurt margins. Sales of summer and non-technical clothing lagged expectations across Christmas and January while in New Zealand, sales of cold weather clothing declined after Christmas during an extended period of dry and warm weather.

"The sales result was below expectations and gross margins for the half year will be below the levels of the prior comparative period, particularly in Australia," the company said. "Successful execution of our key sales promotions in Easter and winter are core to our overall earnings performance for the full year as historically over 60 percent of Kathmandu's sales are made in this period and last year over 70 percent of full year's profit was earned in the second half of the year."

The company's shares slid 36 cents to $1.65, the lowest level since September 2012.

BusinessDesk.co.nz

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