Kathmandu first-quarter sales hurt by lockdown, lifted by Rip Curl

Wednesday, 25 November 2020

Outdoor equipment retailer Kathmandu is benefiting from its recent purchase of surf brand Rip Curl, which helped it lift sales at a time when many stores were closed due to Covid-19.

The retail group posted a 72 per cent increase in sales for the first quarter of its financial year to October 31, attributing the gain to its acquisition of Rip Curl. It didn’t provide a dollar amount for the sales.

Kathmandu, which also owns footwear company Oboz, paid $368 million for Rip Curl last year giving the combined group more than $1 billion of revenue.

Rip Curl diversifies the group’s products, balancing Kathmandu’s winter and outdoor focus with Rip Curl’s summer and beach focus, as well as giving the group inroads into the North America and European markets where Kathmandu wants to expand.

* Retailer Kathmandu cuts jobs as it prepares to reopen

* Kathmandu's Rip Curl stores locked down in Europe

* Kathmandu sales in New Zealand drop, while overall profit rise

Kathmandu chief executive Xavier Simonet says the company is benefiting from diversification.

Chief executive Xavier Simonet said the group was benefiting from the diversification with strong summer sales by Rip Curl in key markets, following successful winter trading for Kathmandu.

However, Kathmandu’s strong camping and footwear sales were not enough to compensate for the impact of Covid-19 with fewer shoppers and lower travel-related sales, Simonet said.

Oboz had strong sales to key accounts, and the forward order book was tracking above pre-Covid-19 levels, he said.

The group’s 60 greater Melbourne stores were closed for most of the period, and 14 Auckland stores were closed for more than two weeks, he said.

Airport stores in Australia as well as Rip Curl stores in Hawaii and Europe were still heavily impacted by either Covid-19-related travel restrictions or government-mandated lockdowns and closures, he said.

Operating profit in the first quarter was in line with last year, and included the benefit of government subsidies and cost savings, he said.

In the 16 weeks to November 15, assuming Kathmandu had owned Rip Curl for the whole period, retail sales through online and physical stores fell 24 per cent, with Rip Curl sales sliding 1.7 per cent and Kathmandu sales down 38 per cent. Online sales jumped 37 per cent.

Simonet said the half-year result would be dependent on the key Christmas trading period, and the impact of Covid-19 on consumer sentiment remained a risk. The company plans to resume dividend payments following its first-half results.

Shares in Kathmandu slipped 1.5 per cent to $1.35 in late-afternoon trading on Wednesday and have dropped 42 per cent this year.