'Massive failure': Market reacts to heavily discounted KMD Brands raise

Thursday, 2 April 2026

KMD Brands’ multimillion-dollar equity raise has left some analysts and shareholders aghast at the heavily discounted offer.

On Tuesday the retailer of outdoor clothing and equipment through brands Kathmandu, Rip Curl and Oboz announced it was embarking on raising $65.3 million in equity, after making a $13.1m loss in the first six months of its current financial year.

KMD Brands is issuing 1.09 billion new shares at 6 cents per share ‒ a 70% discount to its last trading price on the New Zealand Stock Exchange, ahead of its trading halt and announcement of the capital raise.

The company announced on Thursday morning that it had secured $44.2m from the institutional investor component of the raise. It said these shareholders had taken up 79% of their entitlements.

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The retail investor component of its offer hopes to raise $21.1m, which will open on Tuesday.

KMD Brands had been in a trading halt since March 25, ahead of the announcement and as it worked through the offer with investment banks Goldman Sachs and Forsyth Barr.

Simplicity founder Sam Stubbs called the offer a “massive failure of management”, adding that the losers from the deal would ultimately be shareholders.

There have been many comments with the same sentiment since KMD Brands announced the equity raise.

“The parent company and its bankers can dress this up any way they like, but raising capital at this level of discount is a massive failure of management and the board. They should all offer to resign, and let shareholders decide if they should stay,” Stubbs said.

“Who loses here? Shareholders, including many KiwiSavers. Who wins? Well-paid managers, advisors and (in this case) investment bankers.

“I hope the bankers are offering to give their underwrite fee back to any of their clients that bought Kathmandu shares at 19c or above, on their recommendation.”

KMD Brands has been contacted for comment.

The company also announced on Tuesday that chairperson David Kirk would leave the board in coming months, after 13 years on the board.

One shareholder who spoke to The Post on the condition of anonymity said: “This is called begging for money -- and it’s going to be burnt again.”

Entrepreneur Tex Edwards said Kathmandu, rebranded to KMD Brands in 2022 following the acquisition of Rip Curl, “ran ahead of its financial performance.

“This movie gets replayed all the time.”

Turning to humour to make light of the situation, another commentator said: “It’s Kathmandu so surely we should have expected the RRP to be inflated. Now they’re just applying their usual 70% off sale to capital as well.”

KMD Brands grew its total sales by 7.3% to $505.4m in the six months to January 31 and posted an after-tax loss of $13.1m, an improvement on the $20.7m loss recorded in the same period a year earlier.

The company also announced it had refinanced its debt and enter into a new $205m debt arrangement.

It said it is “on track” to deliver a $27.5m in cost savings in the 2026 financial year.

Milford analyst Jeremy Hutton said it was a tough environment to pull off this raise, required to take some pressure off the business; which it was no doubt getting from lenders.

Hutton said the raise was widely expected given the company’s debt levels were much higher than their target range.

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

KMD Brands chief executive Brent Scrimshaw said the equity raise would strengthen the company’s balance sheet and position it to continue its transformation.

KMD Brands’ share price has fallen significantly from a high of $2.40 per share pre-Covid.

Its share price fell more than 46% on market open on Thursday morning to 6.1c per share, down from 11c on opening. That was down from around 20c its was trading at prior to the trading halt.