Kathmandu has turned to acquisitions as a path to growth as the adventure clothing chain reported a strong lift in sales and profits for the first half.
The company posted a 23% rise in profit to $NZ12.3 million on a 4.3% lift in sales for the six months to the end of January.
Kathmandu defied the Christmas/New Year slump reported by some retailers. For the six weeks to March 11, sales were 7.9% above last year. Same store sales growth was 7.5% for Australia and 5.1% for New Zealand.
Kathmandu announced the acquisition of US-based Oboz Footwear for $US60 million cash and earn-out of up to $US15 million.
“Striking the right balance between generating sales growth and improving our gross margin has fueled healthy earnings growth in the first half,” says chief executive Xavier Simonet.
“Sales momentum improved through the end of the Christmas trading period and into February and March.”
The deal to buy Oboz will be funded by a $NZ40 million share placement, at $NZ2.16, to institutions and sophisticated investors and a share purchase plan of $NZ8 million.
Oboz is an American outdoor footwear company, founded in 2007, based in Bozeman, Montana. It designs, sources, and distributes footwear for backpacking, hiking, travel, winter and general outdoor wear through wholesale channels primarily to outdoor retailers in North America.
“This is a significant event for the company, accelerating our international growth, and diversifying our product mix, geography and channels to market,” says Simonet.
The retailer returned to profit in 2016 after a series of sales promotions in 2015 which confused customers. Since then Kathmandu has exited its UK sales network.
Simonet says Kathmandu is focused on delivering profit growth in core markets for the second half of the financial year.
The company announced a dividend of four NZ cents a share.
The first half numbers at a glance: