Kathmandu lifts profit 23 per cent, buys Oboz Footwear

Written on the 20 March 2018 by David Simmons

Kathmandu lifts profit 23 per cent, buys Oboz Footwear

Buoyed by a successful Christmas trading period, Kathmandu (ASX: KMD) has lifted its first-half profit almost 23 per cent.

The dual-listed retail chain reported a $11.5 million net profit in the six months to January 31, and a 4.3 per cent lift in revenue to $NZ204.8 million.

Chief executive Xavier Simonet says the sales momentum from the Christmas trading period has continued into February and March, with growth to come for the rest of the financial year.

"We are focused on delivering profit growth in our core markets for the second half of FY18," says Simonet.

Sales grew by 3.7 per cent in Australia, while New Zealand sales fell 6.4 per cent, impacted by lower levels of clearance stock.

The outdoor wear retailer says sales rose almost eight per cent in the first six weeks of 2H18 ending March 11 from a year ago.

"Striking the right balance between generating sales growth and improving our gross margin has fuelled healthy earnings growth in the first half," says Simonet.

"Our financial position continued to strengthen during the first half year and we ended the period with healthy inventory and record low half year net debt."

In addition to its first-half results, the company announced it has agreed to buy US-based Oboz Footwear for $77.7 million.

Oboz designs, sources, and sells footwear for backpacking and hiking. Currently it distributes its products directly to North American outdoor chains, limited online sellers and show and sporting goods stores.

Kathmandu and Oboz have worked in partnership for over 10 years, with Kathmandu historically being the second customer of Oboz when the brand launched in 2007. Kathmandu is currently the exclusive retailer of Oboz in Australia and New Zealand.

Simonet says the purchase will help the company accelerate growth internationally.

"The acquisition of Oboz enables the Kathmandu Group to accelerate our international growth, and diversifies our product mix, geography and channels to market," says Simonet.

"I admire the success of Oboz in North America. They are an innovative and authentic outdoor brand with deep roots in Montana, driven by a passionate and successful team. It seems very natural that after so many years of close collaboration we deepen our relationship."

The transaction will be funded via a fully underwritten NZ$40 million placement of ordinary shares to institutions and sophisticated investors and a non-underwritten Share Purchase Plan to raise NZ$8 million.

Oboz founder, John Connelly, will continue to lead Oboz from Bozeman and will report to Simonet.

An interim dividend of NZ$0.04 per share will be paid to shareholders on 8 June 2018. The dividend will be fully franked for Australian shareholders.

Following this morning's announcement the company went into a trading halt pending the release of an announcement on Thursday, 22 March 2018.

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Author: David Simmons

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