Kathmandu delays new store openings after $1.8 mil loss

  • News
  • March 24, 2015
  • Elly Strang
Kathmandu delays new store openings after $1.8 mil loss

Kathmandu Holding’s earnings at the same time last year were $11.4 million.

The franchise has over 130 stores in Australia and New Zealand and plans to increase to 180 stores.

However, due its first-half loss, it is scaling back and has cut its full-year target of opening 15 stores down to 11.

Eight stores have already been opened in Australia in the last six months.

Acting chief executive Mark Todd says the loss is 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,” Todd says.

“Most importantly, our Christmas sale and trading through January did not produce the sales we expected."

Sales rose 7 percent to $179.4 million and costs increased 18 percent to $99.5 million.

Kathmandu says expenses were in line with what the company expected, but lower sales meant costs increased to make up 55.5 percent of sales.

Todd says the company is taking what it has learnt and changing its promotional activity for this year, as a number of promotions didn’t work.

These included promotional campaigns that didn’t drive foot traffic and new ranges of active wear, wovens and midweight fleece that didn’t hit the mark with buyers.

Weaker discretionary spend in Australia also was a factor.

He says the full-year performance depends on sales made in the key Easter and winter sales periods.

“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,” he says.

The company still plans to invest $5 million a year to expand its business overseas in the UK and Europe over the next three years.

Kathmandu’s half-year loss comes on the back of Fishing Camping Outdoors FCO stores shutting up shop in New Zealand in February.

It shows that now is a tough time to be retailing outdoor gear.

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