Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Kathmandu shares surge on Australian growth

Kathmandu shares surge as investors take shine to Australian sales growth

By Suze Metherell

March 24 (BusinessDesk) – Shares in Kathmandu Holdings’ jumped 8.4 percent, making them the best performer on New Zealand’s benchmark stock index today, as investors looked past the impact of the high kiwi dollar on first-half earnings to see sales growth in Australia, the retailer’s largest market.

Kathmandu shares jumped 28 cents to a two-week high of $3.62. The company’s Australian unit, which accounts for almost two thirds of revenue, posted a 0.3 percent decline in sales to $103.1 million in the six months ended Jan. 31, although in Australian dollar terms sales rose 15 percent on a year earlier.
First half Australian pre-tax earnings climbed 45 percent to $2.8 million, the Christchurch-based company said.

“The market appears to be looking through the currency translation effect as they’re obviously still getting quite strong growth in Australia,” said Craig Stent, who helps manage $1 billion in equities at Harbour Asset Management. “Even the retailers in Australia, like Myers and David Jones have had pretty average growth, so Kathmandu is obviously a stock which has delivered.”

Kathmandu, who sells outdoor clothing and equipment, said the stronger kiwi against the Australian dollar sliced $2.2 million off pretax earnings in the half. The New Zealand dollar has risen 18 percent against its Australian counterpart in the past 12 months and was recently at 93.78 Australian cents.

“We had a good half in Australia and the Australian market, its only when you convert it to New Zealand dollars that it doesn’t look that flash,” chief financial officer Mark Todd said on a teleconference. “There is a 15 percent weakening in the exchange rate, Australia is two thirds of our business, so it has approximately a 10 percent effect on earnings as a result.”

Net profit rose 11 percent to $11.4 million in the period, while sales rose 1 percent to $167.6 million. In New Zealand, sales rose 4.6 percent to $62.3 million, to account for 37 percent of total revenue, while earnings before tax rose 8.2 percent to $9.85 million.

The company’s gross profit margin widened to 63.9 percent in the first half from 62.7 percent a year earlier.

“There have been difficult trading conditions generally across Australia and New Zealand, as experienced by other retailers, but Kathmandu has still managed to get pretty good sales growth and maintain their gross margin,” said Harbour Asset’s Stent.

“Trading through Christmas was quite strong, so they didn’t have to discount as much as they possibly have in the past, so they kept their prices up. Also they’ve got an increased range and high gross margin products compared to what they’ve had in the past,” Stent said.

Sales in the UK fell 33 percent to $2.3 million while its loss widened to $1.2 million from $783,000. Kathmandu opened four new stores in Australia, one in New Zealand and closed one in the UK.

The company said it expects full-year profit growth, but warned “unseasonal weather through the Easter and winter sale periods is always a significant variable influencing the full year’s results.”

Kathmandu stock is rated an average “buy” according to analysts polled by Reuters. The company will pay a first-half dividend of 3 cents per share on June 17.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Fruitful Endeavours: Kiwifruit Exports Reach Record Levels

In June 2016, kiwifruit exports rose $105 million (47 percent) from June 2015 to reach $331 million, Statistics New Zealand said today. Overall, goods exports rose $109 million (2.6 percent) in June 2016 (to $4.3 billion). More>>

ALSO:

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Sparks Fly: Gordon Campbell On China Steel Dumping Allegations

No doubt, officials on the China desk at MFAT have prided themselves on fashioning a niche position for New Zealand right in between the US and China – and leveraging off both of them! Well, as the Aussies would say, of MFAT: tell ‘em they’re dreaming. More>>

ALSO:

Loan Sharks: Finance Companies Found Guilty Of Breaching Fair Trading Act

Finance companies Budget Loans and Evolution Finance, run by former 1980s corporate high-flyer Allan Hawkins, have been found guilty of 106 charges of breaching the Fair Trading Act for misleading 21 borrowers while enforcing loan contracts. More>>

ALSO:

Post Panama Papers: Govt To Adopt Shewan's Foreign Trust Recommendations

The government will adopt all of the recommendations from former PwC chairman John Shewan to increase disclosure and introduce a register for foreign trusts with new legislation to be introduced next month. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news