The Kathmandu Holdings Ltd (ASX: KMD) share price could be one to watch this morning after it reported a mixed January 2019 half year result.
Kathmandu was founded in 1987 and now operates in Australia, New Zealand and the UK. It’s one of Australia and New Zealand’s largest outdoor gear retailers and now has over 165 stores across the two countries. The Kathmandu name shares the same name as Nepal’s capital, which is near to the Himalayas.
Can Kathmandu’s Share Price Climb?
The market will have to be very impressed with today’s report to send the Kathmandu share price back to $3.
The company announced its half year result to 31 January 2019 this morning. Total sales increased by 13.3% to NZ$232 million and gross profit grew by 9.4% to NZ$141.9 million.
According to the figures released, Kathmandu’s Australian same store sales increased by 1.2% and New Zealand same store sales dropped 2.2%. As a whole, Kathmandu’s same store sales were flat with 0% growth.
However, total Kathmandu sales grew by 2.7%, with online sales now representing 9.5% of direct sales. The Kathmandu gross margin increased from 63.4% to 64.2% due to less discounting.
The acquired Oboz, an outdoor footwear brand, is progressing well. Oboz sales grew 38.6% to NZ$29.2 million and its EBIT grew 77.1% to NZ$4.7 million (click here to learn what EBIT means). Oboz has achieved its earn-out target.
The Kathmandu group grew normalised EBITDA by 10% to NZ$27.6 million, normalised EBIT grew by 10% to NZ$19.8 million and normalised net profit after tax (NPAT) increased by 7.3% to NZ$13.2 million.
Kathmandu Dividend
Kathmandu decided to maintain its dividend at NZ$0.04 per share with the company’s net debt currently at $79.2 million.
Kathmandu Management Comments And Outlook
Kathmandu CEO Xavier Simonet said: “We remain focused on achieving sales and profit growth in our core Australasian business to fund investment for future growth. Our full year result is still very dependent on the key promotions to come, in which we will be cycling a successful second half last year.”
Is Kathmandu a buy?
With Kathmandu stores reporting no same store sales growth I don’t think this is a good time to be buying shares, despite the good result from Oboz. Profit could go backwards if retail conditions continue to be difficult.
If I were looking for retail shares to buy I would rather own Premier Investments Limited (ASX: PMV) shares or, even better, non-retail growth shares that are growing overseas.
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