Kathmandu decides to get out of the UK as profits fall by half

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Kathmandu posted a 51.7% drop in full year profit to $NZ20.4 million after a fall in local sales, a rise in costs and a series of sales promotions which confused customers.

The adventure clothing retailer reported subdued consumer sentiment in Australian retail and a weakening foreign exchange rate increasing the cost of goods.

The company said pricing and promotional activity during the first three quarters of the year caused “customer confusion”.

Sales were up 4.2% to $NZ409.4 million, mainly due to an expanding store network. Same store sales fell by 2.7% in Australia and 1.1% in New Zealand.

Kathmandu’s share price has fallen to $1.27 from $2.94 a year ago. It has rejected a $AU324 million takeover bid by New Zealand retailer Briscoe as inadequate and “highly opportunistic”.

CEO Xavier Simonet, who joined Kathamndu this year, says the result highlights the need to review costs.

However, the company is committed to a long term target of 180 stores across Australasia. Three new stores are confirmed for 2016.

“The board has taken the decision to exit the UK store network in 2016,” Simonet says.

“We intend to build on our brand equity and online platform to expand internationally using a capital light model.”

A final dividend of NZ 5 cents a share will be paid, bringing the full year payout to NZ 8 cents.

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