Ann: HALFYR: KMD: 1H FY15 Media Announcement

• Release Date: 24/03/15 09:28
• Summary: HALFYR: KMD: 1H FY15 Media Announcement
• Price Sensitive: No
• Download Document  5.67KB

					KMD
24/03/2015 09:28
HALFYR
PRICE SENSITIVE
REL: 0928 HRS Kathmandu Holdings Limited

HALFYR: KMD: 1H FY15 Media Announcement

Kathmandu Holdings Limited (ASX/NZX: KMD)

FY15 First Half Results - Media Announcement

- Sales increased by 7.0% to NZD $179.4m
- Gross profit $ decreased by 0.7% to NZD $106.3m
- Gross margin % decreased from 63.9% to 59.3%
- EBIT decreased to NZD $0.6m from NZD $17.6m in 1H FY14
- NPAT was a loss of NZD $1.8m from a profit of NZD $11.4m in 1H FY14

Summary of Results

 NZD $m Variance
 1H FY15 1H FY14 NZD $m %
Sales 179.4 167.6 11.8 7.0%
Gross Profit 106.3 107.1 (0.8) (0.7%)
EBIT 0.6 17.6 (17.0) (96.6%)
Net Profit (1.8) 11.4 (13.2) (115.8%)

Acting Chief Executive Mark Todd commented:

"As signaled in our market update in February the first half of our 2015
financial year delivered a disappointing result.

There were a number of contributing factors. The aggressive quitting of
excess stock in August and September drove top line sales but at
significantly reduced gross margins. This brought forward some customer
purchases that would otherwise have been made at higher margins later in the
half.

Most importantly our Christmas sale and trading through January did not
produce the sales we expected. Our analysis tells us that contributing
factors included:

- promotional campaigns that did not drive the expected foot traffic;
- some apparel product ranges, notably active wear, wovens and midweight
fleece, that did not hit the mark with buyers; and
- a generally weaker discretionary spend environment in Australia."

Sales, Store Numbers, Gross Margin and Inventory

Sales Growth 1H FY15

Same store sales growth was reduced from 2.7% in local currencies to 0.6% in
the reporting currency due to the appreciation of the New Zealand dollar in
the period.

Pleasing growth in the UK in both total and same stores sales was achieved in
the period.

 Total Sales NZD $m Total Sales Growth Local currency Total Sales Growth NZD
Same Store Sales Growth Local currency Same Store Sales Growth NZD
Australia 111.1 11.7% 7.8% 0.9% (2.6%)
New Zealand 65.2 4.7% 4.7% 4.8% 4.8%
United Kingdom 3.1 28.5% 32.7% 26.8% 30.9%
Total 179.4 9.3% 7.0% 2.7% 0.6%
Note: Same store sales are for the 26 weeks ending 25 January 2015

Online Sales Growth

Online sales growth continued to be strong in all countries, with overall
growth of 33% led by an uplift of over 90% in the UK. Online sales are now
5.8% of total sales.

Permanent Store Openings

Kathmandu opened eight new permanent stores in the first half of 2015, all in
Australia. The Company expects to open a total of 11 new permanent stores in
the 2015 financial year.

Gross Margin

Gross margin declined 4.6% pts from 63.9% to 59.3% compared to 1H FY14. This
was the result of a combination of factors including the sale of a large
amount of clearance stock in the first quarter, below target sales of higher
margin summer apparel product groups and price pressure in some key product
categories.

Inventory levels

Total inventory levels decreased by 5.1% ($5.2m) on the same period in 2014
and by 15.8% on a per store basis.

1H FY15 NZD $m 1H FY14 NZD $m Change NZD $m Change
% Change per store %
Inventory 97.3 102.5 (5.2) (5.1%) (15.8%)

Operating Expenses

Reduced operating leverage reflects the shortfall in 1H sales performance.

Operating expenses in the period increased by 5.1% as a percentage of sales
compared to 1H FY14. The main areas of increase in expenses were:

- Rental expense (1.1%) reflecting most new stores opened in 2H FY14 and 1H
FY15 being in malls.
- UK growth investment expenditure (0.9%);

Operating expenses (excluding depreciation)

 1H FY15 1H FY14
Rent, NZD $m 25.3 21.8
% Sales 14.1% 13.0%
Other operating costs, NZD $m 74.2 62.7
% Sales 41.4% 37.4%
Total 99.5 84.5
% Sales 55.5% 50.4%

Other Financial Information

The increase in capital expenditure in the period was a result of the
completion of nine new or relocated store projects compared to six in the
first half of 2014.

Operating cash flow improved from 1H FY14 and gearing is conservative and
stable.

 1H FY15 1H FY14
Capital Expenditure, NZD $m 9.8 8.1
Operating Cash Flow, NZD $m (5.8) (16.0)
Net Debt, NZD $m 85.5 80.9
Net Debt: Net Debt + Equity 22.6% 22.5%

Interim Dividend

An unchanged interim dividend of NZ3.0 cents per share will be paid to
shareholders on the register as at 5 June 2015. The dividend will be fully
franked for Australian shareholders and fully imputed for New Zealand
shareholders. The final dividend is expected to remain fully franked and
fully imputed.

Outlook

Acting Chief Executive Mark Todd commented:

"Group same store sales have been about 2% below last year on a constant
currency basis in the seven weeks to 15 March, a period with very limited
promotional activity and low sales volume generally.

As with every year, the full year result is highly dependent on the sales and
gross profit margin performance we achieve in the Easter and Winter sales
periods. We have prepared carefully for these sales, incorporating what we
learned from the first half. Promotional activity has been modified and we
are even more focused on delivering benefits to our 1.2 million Summit Club
members. Trading in the first week of Easter sale was soft in Australia, but
satisfactory in NZ.

We continue to lay the foundations for future growth at Kathmandu. Our
investments in systems, continuing brand leadership in the outdoor and
adventure travel categories, and our scale all support continued growth and
leadership in Australasia. We remain confident that we can succeed in
developing meaningful sales in international markets.

We look forward to our new Chief Executive, Xavier Simonet, starting with us
on 1 July."
End CA:00262198 For:KMD    Type:HALFYR     Time:2015-03-24 09:28:04