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Store closures, travel bans squeeze Kathmandu

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Group earnings before interest, tax, depreciation and amortisation for the October quarter were in line with last year, including government subsidies and cost savings.

“The group’s half year result will be dependent on the key Christmas trading period,” said Mr Simonet. “The impact of COVID-19 on consumer sentiment remains a risk.”

Mr Simonet said Kathmandu sales had been impacted by Melbourne and Auckland store closures, low foot traffic in CBD and tourist locations and lower demand for travel-related purchases.

The group’s 60 stores in Melbourne were closed for most of the period and 14 Auckland stores were closed for more than two weeks. Airport stores in Australia and Rip Curl stores in Hawaii and Europe were also still heavily impacted by either COVID-19 related travel restrictions or government mandated lockdowns and closures.

The Rip Curl brand had fared better, with retail stores trading strongly where open and pleasing wholesale orders for the second half of 2021.

“We are realising the benefit of a diversified group, with strong performance in summer weighted product categories for Rip Curl in all key geographies, following successful winter trading for Kathmandu,” Mr Simonet said.

“Rip Curl’s strong sales performance in its key markets of Australia, Europe and North America is very pleasing,” he said. “It highlights the strength of Rip Curl’s global brand and innovative products as more people take to surfing.”

“As for Kathmandu, camping and footwear categories have over-performed, but have not compensated for the impact of COVID-19 with low footfall in CBD and tourist locations as well as lower travel-related purchase,” Mr Simonet said.

The balance sheet remained strong after a deeply discounted $201 million capital raising in April, enabling Kathmandu to respond to current trading conditions and pursue growth opportunities that might arise.

The company intends to resume dividend payments, subject to market conditions and trading performance, following the first half results in March.

Kathmandu’s 2020 profits were decimated by the pandemic, which reduced sales by about $135 million and led to 44 per cent drop in underlying net profit to $NZ31.5 million.

But the retailer hopes trends triggered by the virus, including working from home and more local tourism, will boost sales of hiking gear, surfboards, wetsuits and casual clothing over time.

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