KMD Brands announces equity raise drive amid multimillion-dollar loss

Tuesday, 31 March 2026

The company behind retail chain Kathmandu is refinancing its debt and embarking on raising $65.3 million in equity after making a $13.1m loss in the first half of its current financial year.

KMD Brands is issuing 1.09 billion new shares from April, and has been in a trading halt since March 25 as it works through the process with Goldman Sachs and Forsyth Barr as the underwriters of its offer.

Out of the $65.3m planned to raise, $6.8m will be through institutional investors and the rest through the public and eligible shareholders.

KMD Brands, which owns and operates Kathmandu, Rip Curl and Oboz, grew its total sales by 7.3% to $505.4m in the six months to January 31, but ultimately saw its margins decline in the period.

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Its after-tax loss of $13.1m in the period, was an improvement on the $20.7m loss it recorded in the same period a year earlier.

No dividend has been declared.

Sales at Kathmandu led the group’s growth momentum in the first half.

Kathmandu sales grew more than 12% in the six months to $176.1m and Rip Curl sales increased 4.6% to $291.4m. Oboz sales grew to $38m.

The company said its brands had “balanced sales growth with gross margin achievement” through selling through aged inventory, and its underlying operating expenses were lower than last year, in the six months.

Its “Next Level” cost reset programme was helping to offset growth investments and continued global cost pressure, the company said.

KMD Brands group chief executive Brent Scrimshaw said the Next Level strategy had shown “strong early progress has been made” in its efforts to turnaround the business.

“We’re particularly encouraged by the improved performance of Kathmandu, which has delivered double-digit same store sales growth for the first time in over two years. It’s also pleasing to see consumers responding positively to our accelerated product freshness, flow and assortment, along with a renewed focus on innovation,” Scrimshaw said in an NZX market update.

“While Rip Curl has navigated more volatile global trading conditions, we remain confident that the brand’s repositioning will drive long-term growth.”

KMD Brands’ share price has fallen approximately 92% from a high of $2.40 per share pre-Covid to 20 cents when shares were trading last week.

It has a market capitalisation of $139m.

Chair David Kirk said the company had returned to growth under its new leadership.

Kirk will step down as chair in coming months, after 13 years on the board.

“After securing a short-term extension to our debt facilities in January 2026, it was important for our continued execution to strengthen our balance sheet, accelerate our path to our leverage target, and secure a longer-term debt facility to support our ongoing transformation,” Kirk said of meeting its objectives as part of its strategy.

“With the balance sheet now strengthened through the debt refinancing and the launch of the equity raise, KMD Brands is well positioned to continue executing its Next Level strategy.”

Outlook

Despite a challenging global consumer operating environment, KMD Brands said it expected to continue to grow its sales and deliver on its planned cost savings of $27.5m.

In the first six weeks of the second half of the financial year, Kathmandu sales grew 11.1% year-on-year and Rip Curl sales grew 1.2%.

The company plans to close six stores in the months ahead, as part of its wider plans to close 21 stores. So far it has closed 15 stores across its store network and plans to continue to review its portfolio.

In the company’s result presentation, management acknowledged “the volatile macro marketplace” and said it was monitoring disruption cause by conflict in the Middle East and the fuel impact closely.

“We continue to monitor logistics and input costs closely. What we can control and maintain is being tighter on our margin management,” group chief financial officer Carla Webb-Sear said.

“We continue to manage the things that we feel we can control.”

Milford analyst Jeremy Hutton said KMD Brands equity raise was widely expected given the company’s debt levels were higher than their target range.

“The raise was required to take some pressure off the business that would be coming from its lenders, plus giving it some more flexibility or headroom to try execute its strategy,” Hutton said.

“It is a tough environment to pull off this raise, given the current geopolitical environment and financial markets selling off over the past few weeks.”

Hutton said the company’s result was not great given its profit was still negative, but there was some evidence of its gross margins improving.

“There’s still a long way to go for a business and shareholders that have had a very tough few years.”