Kathmandu first-half profit jumps; resumes dividend payments

Tuesday, 23 March 2021

Kathmandu chief executive Xavier Simonet says Rip Curl delivered an “outstanding” result.

Kathmandu Holdings almost tripled its first-half profit as it benefited from its purchase of surf brand Rip Curl. It resumed dividend payments that it had suspended last year due to Covid-19.

The retailer reported net profit of $22.3 million in the six months to the end of January, up from $7.6m last year. The latest profit includes a full six months of trading for Rip Curl, and net government wage payments of $15.2m as a result of Covid-19.

The company will pay a 2 cent dividend on June 4, after suspending payments in the 2020 financial year due to the impact of Covid-19. Its shares rose 3.2 per cent to $1.28 in mid-morning trading on Tuesday.

Kathmandu paid $368 million for Rip Curl in October 2019, to diversify 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.

* SkyCity first-half profit falls 76% as pandemic bites

* Kathmandu lifts first-half sales 12%, helped by new Rip Curl business

“Despite operating in challenging conditions over the first half due to the substantial impacts from Covid-19, Rip Curl delivered an outstanding first-half result, validating the group’s diversification strategy,” said chief executive Xavier Simonet. “Benefiting from increased participation in surfing in Australia, Europe and the USA, Rip Curl achieved strong sales and profits despite Covid-19 trading restrictions.”

International travel restrictions hurt Kathmandu’s outdoor travel and adventure sales, he said.

“Kathmandu was particularly impacted by Covid-19 related travel restrictions, with reduced demand for insulation and rainwear resulting from a lack of international travellers to the Northern Hemisphere,” Simonet said.

In response, the company focused on products that were in high demand, such as wetsuits and surfboards for Rip Curl, and camping and footwear for Kathmandu, he said.

Group sales rose 13 per cent to $410.7m.

Like many retailers, the group benefited from a surge in online shopping during the pandemic, with 12.7 per cent of sales to consumers transacted online, from 8.8 per cent last year. Some of its physical stores were closed during the period.

Rip Curl pre-tax profit jumped to $44m from $16.1m the year earlier as sales increased 86 per cent to $251.1m.

In contrast, Kathmandu posted a pre-tax loss of $7.1m from a profit of $10.5m last year as sales dropped 35 per cent to $127.3m.

Simonet said he expects to make around $15m of savings across the group for the full year.