The KMD Brands Ltd (ASX: KMD) share price is in focus after the outdoor apparel retailer revealed a strong profit recovery.
There are three different brands with the KMD stable – Rip Curl, Kathmandu and Oboz.
KMD FY23 half-year result
Here are some of the highlights from the result:
- Sales increased 34.5% to NZ$547.9 million
- Gross profit increased by 37% to NZ$321.8 million (with a 100 basis point, or 1%, improvement of the margin)
- Operating expenses only increased by 23%
- Underlying EBITDA (EBITDA explained) soared 342.5% to NZ$45.3 million
- Statutory net profit recovered to NZ$14 million, up from a NZ$5.5 million loss
In the first quarter of the half, the business saw a strong recovery as it cycled against COVID lockdowns in the prior corresponding period in FY22.
In the second quarter of FY23, it also achieved growth on last year’s post-lockdown rebound, supported by the return of international travel and tourism.
The company held its marketing spending at a flat level, which helped boost the profit margins. KMD is expecting further leverage as sales growth continues. This sounds like good news for the KMD share price.
Kathmandu dividend
The board of KMD decided to pay an interim dividend of NZ$0.03 per share, which was the same as last year.
Expectations and the outlook
KMD said that the FY23 full year operating expenses will be around 48% of sales.
It said that ongoing initiatives are aimed at further reducing annualised operating costs by up to 2% of sales for FY24. This would have the effect of boosting the EBITDA margin and the net profit margin.
B Corp
The company was proud to report that it’s one of the first multinational companies in ANZ to be certified in its entirety, and one of only 45 listed businesses globally.
Final thoughts on the KMD share price
It seems the business has really bounced back and is expecting further profit margin improvement.
The company is down heavily over the past year. I think it’s a good time to consider the business, considering how much it has fallen, and profit margins are improving. But, it could be an interesting period for retailers in the short-term though, with all of the inflation and interest rate rises.
