One of the surefire signs winter is here is when city slickers don their puffer jackets where social-desirability invariably leads to more jacket sales, but as KMD Brands (ASX: KMD) has found, that’s reliant on said Kathmandu jackets being out in public view. With less public foot traffic in response to the pandemic, earnings have been hit hard for the clothing company without Jobkeeper assistance.  

Having claimed more than $40 million in Jobkeeper payments during the pandemic, the absence of those Government handouts has been felt hard for KMD Brands which operates Kathmandu and Rip Curl retail stores and online channels. 

Total group sales are expected to be in the range of $955 million to $965 million for the year ending 31 July 2022 (FY22). On the lower end, this would represent a 3.5% increase on the $922.8 million reported in FY21. 

However, the loss of JobKeeper payments and difficult retail trading conditions with Australians spending more time at home (particularly city workers who wore their Kathmandu jackets to work every day), will see KMD deliver underlying EBITDA in the range of $88 million to $94 million. On the lower end, this would represent a 22.3% decrease from the $113.3m reported in FY21 despite the higher revenue. 

With their regular winter promotions and online sales, Kathmandu puffer jackets were somewhat cleared from inventory but the company also cited sporadic store closures due to staffing shortages and COVID outbreaks.

“Inventory levels are forecast to be above last year, reflecting decisions taken in the light of ongoing supply chain disruption, to accelerate orders to meet forward wholesale orders and expected retail demand,” said KMD Brands Managing Director, Michael Daly. 

“Inventory quality remains high, with depth in carry forward styles, and lower clearance levels year on year.” 

KMD shares are trading around $1.00, down from their 52-week high of $1.60 in October 2021.