KMD Brands reports challenging first half FY24 amidst 14.5% decline in sales

AUCKLAND: KMD Brands Limited, a prominent player in the retail sector, has released its interim results for the first half of the fiscal year 2024, revealing a significant downturn in sales and profits.

The Group’s sales plummeted by 14.5% to NZ$468.6 million compared to the same period last year, reflecting the ongoing impact of weak consumer sentiment.

Despite the sales slump, KMD Brands managed to marginally improve its gross margin by 10 basis points, reaching 58.8%. Operating expenses saw a reduction of NZ$15.8 million, a 5.7% decrease year-over-year.

However, this cost control was not enough to offset the revenue decline, with underlying EBITDA dropping a stark 66.8% to NZ$15.1 million.

The Group’s statutory net profit after tax (NPAT) reported a loss of NZ$9.7 million, while the underlying NPAT also experienced a loss of NZ$6.9 million. In light of these results, KMD Brands has opted not to declare an interim dividend.

Michael Daly, Group CEO & Managing Director, commented on the results, stating, “The first half of FY24 has been marred by a combination of factors, including the weakest consumer sentiment in recent times, an exceptionally warm winter in Australia, and a product range too heavily weighted towards winter apparel, leading to a disappointing performance for our Kathmandu brand.”

He further noted that both Rip Curl and Oboz are facing challenges in surpassing their record sales from the previous financial year. The direct-to-consumer channel has shown resilience with single-digit declines, but the wholesale channel has struggled as customers reduce their inventory levels.

Despite these challenges, KMD Brands has successfully improved its gross margin and maintained a strong balance sheet, with net working capital 7.4% lower year-over-year at NZ$226.2 million. Daly concluded, “In a tough retail environment, we have focused on improving our gross margin, controlling operating costs, and reducing working capital to navigate through these turbulent times.”

The company remains committed to adapting its strategies to better align with market conditions and consumer preferences as it moves into the second half of the fiscal year.

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