Kathmandu Holdings Limited
FY2017 first half results
o Sales increased by 0.2% to NZ$196.3m
o NPAT increased by 6.4% to NZ$10.0m
o Interim Dividend increased to NZ 4.0 cps from NZ 3.0 cps
Kathmandu Holdings Limited (ASX/NZX: KMD) today announced Net Profit After
Tax (NPAT) of NZ$10.0 million for the six months ended 31 January 2017, an
increase of NZ$0.6 million compared with the prior corresponding period.
Summary of Results
1H FY17 1H FY16 Change Change
NZD $m NZD $m NZD $m %
Sales 196.3 196.0 0.3 0.2%
Gross Profit 121.0 123.1 (2.1) (1.7%)
EBITDA 21.5 21.9 (0.4) (1.8%)
EBIT 14.8 15.1 (0.3) (2.0%)
NPAT 10.0 9.4 0.6 6.4%
Chief Executive Officer Xavier Simonet commented:
"The results for the first half of FY2017 were overall in line with our
expectations. It is pleasing to exceed last year''s first-half net profit
while absorbing c. $4m of adverse foreign currency impacts in gross margin.
We achieved strong same store sales growth in Australia which is our largest
market, as we maintained rigorous cost control and continued to drive working
capital efficiency."
Sales, Store Numbers, Gross Margin and Inventory
Sales Growth
Sales grew in Australia and New Zealand, with strong same store sales growth
in Australia, our largest market. UK sales declined with the closure of three
stores last year.
Total Sales Growth Same Store Sales Growth
Local currency Local currency
Australia 6.0% 5.0%
New Zealand 0.9% 1.2%
United Kingdom (57.8%) (26.5%)
Group (constant currency) 3.0% 3.4%
Group (NZD reporting currency) 0.2% 0.6%
Note: Same store sales are for the 26 weeks ended 29 January 2017
Online sales grew strongly, assisted by the launch of a responsive website in
November, which delivers a better customer experience as it integrates
product and content. Overall, we achieved over 18% online sales growth,
resulting in online sales reaching 7.4% of total sales.
Store Openings
Kathmandu opened two new Australian stores in the last twelve months, and
closed one store. Three UK stores were closed during last year reflecting our
decision to grow international presence through online retail and wholesale
partnerships. We will continue to expand our store footprint particularly in
Australia as return on investment justifies.
Gross Margin
Gross margin was 61.6% in 1H FY17, a decrease of 1.2% points from 1H FY16.
Sourcing negotiations, product newness, price action, and improved stock
control all helped to offset higher input costs as a result of foreign
currency. A higher proportion of clearance sales year on year also had a
negative impact on gross margin.
Inventory
Total inventory levels decreased by -6.7% (NZ$6.9m) from 1H FY16, and by 3.8%
on a stock per store basis at constant exchange rates.
1H FY17 NZD $m 96.4
1H FY16 NZD $m 103.3
Change NZD $m (6.9)
Change % (6.7%)
Change per store % (3.8%)
The reduction in inventory is the result of our continuing investment in
forecasting and planning technology since FY2014. More accurate buying, to
reflect store range differences, provides efficiencies in our working capital
requirements.
Operating Expenses
Operating expenses decreased by NZ$1.8m and by 1.0% as a percentage of sales
compared to 1H FY16.
Rent increased by NZ$1.5m, and included relocations of the new Australian
distribution centre and the New Zealand support office.
Other operating expenses decreased by NZ$3.3m or 1.7% as a percentage of
sales, with efficiencies achieved in advertising, support office costs, and
retail labour.
Operating expenses (excluding depreciation)
1H FY17 NZD $m 1H FY16 NZD $m
Rent 30.5 29.0
% of Sales 15.5% 14.8%
Other operating expenses 69.0 72.3
% of Sales 35.2% 36.9%
Total 99.5 101.3
% of Sales 50.7% 51.7%
Other Financial Information
We invested NZ$6.8m in capital projects during the first half, primarily in
the expansion of our store network. We also completed the new Melbourne
distribution centre, which was designed to support Kathmandu''s future growth
plans.
Lower net debt and subsequent lower financing costs were a direct benefit
from improved working capital efficiency. Our gearing decreased year on year
and remains conservative at 13.9%.
1H FY17 NZD $m 1H FY16NZD $m
Capital Expenditure 6.8 12.9
Operating Cash Flow 10.0 24.2
Net Debt 48.9 66.8
Net Debt: Net Debt + Equity 13.9% 17.9%
Interim Dividend
An interim dividend of NZ 4.0 cents per share will be paid to shareholders on
the register as at 2 June 2017. The dividend will be unfranked for Australian
shareholders and fully imputed for New Zealand shareholders.
Outlook
Chief Executive Xavier Simonet commented:
"We have had a solid start to FY17, but as always the success of our full
year result will hinge on key sale periods that fall in the second half.
We have worked hard to minimise the impact of currency on our gross margin
through sourcing negotiations, product newness, price action, improved stock
management and cost control. Maintaining gross margin and operating
efficiency will continue to be a key focus.
We will continue to deliver great value to our customers through the benefits
of our refreshed Summit Club loyalty programme, and by designing innovative,
distinctive and sustainable quality products.
The Australasian business provides the foundation for our brand to expand
internationally. As we look forward past FY17, I am excited about the
progress we are making towards securing new international wholesale
relationships."
End CA:00298541 For:KMD Type:HALFYR Time:2017-03-21 09:08:43