Only for retail company KMD Brands (ASX: KMD) would the phrase “winter is coming” elicit bright smiles and enthusiastic cheers as Kathmandu jackets enjoy a moment in the spotlight with the highest-ever sales growth of over 24.5% for Q4. Though it was the brand’s best-ever winter performance, the excitement has thawed as fewer people buy jackets owing to working from home, and the Company has to cope with a lack of Jobkeeper payments.
Overall, KMD’s sales were up 6.2% to $979.8 million, a record for the Company. Their Rip Curl brand led the way with total sales up 9.5% to $536 million, and Kathmandu trailed behind with an increase of 6.8% to $381.6 million. Oboz, however, recorded a loss of 18.2%, amounting to $61.3 million.
Though Oboz witnessed record order demand, the supply fell short and the brand was unable to cater to 40% of the orders. The brand was unable to meet demand because of three-month factory closure in Vietnam due to Covid and international freight delays.
Overall, the Company suffered a 40% decline in net profit after tax to $36.8 million, owing to lockdowns resulting in over 11,000 lost trading days, changing lifestyles and no Government support. Its underlying EBITDA also decreased by 16% on FY21 to $92 million because of Covid and Oboz supply chain disruptions.
Still, KMD CEO & Managing Director Michael Daly is scraping for silver linings. He commented, “The strength of our brands was evident in record Group sales of nearly $980 million, with a strong return to sales growth across all of our brands in the final quarter. Rip Curl achieved sales growth across all channels and key international regions, particularly Europe, Hawaii and South-East Asia, as we continued to invest in the long-term value of the brand.”
“Although impacted substantially by COVID lockdowns and restricted travel in the first half of FY22, Kathmandu saw a strong rebound in the second half.”
The popular jacket brand also witnessed a nearly 50% growth in its online sales since FY19, i.e. pre-Covid. Today, as fewer people step out to shop, online sales make up 18.7% of the brand’s total sales. Rip Curl’s digital sales also more than doubled since pre-Covid levels. Once inventory levels came up to snuff, Oboz’s online sales picked up, too.
Of the Company’s plans going ahead, Daly informed, “Key growth factors in FY23 include strong wholesale demand for Rip Curl, post-COVID tourism and footfall increases, as well as further wholesale expansion to Europe and Canada for Kathmandu; and with Oboz supply challenges now addressed, we can capitalise on record demand for its products.”
August sales for the Company are already up 44.2% on August 2021, and KMD is counting on global expansion to boost its balance sheet.
Alinda is a Business Reporter for The Sentiment
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