Kathmandu's profits are coming in flat

Gilles Mingasson/Liaison

Adventure clothing retailer Kathmandu is heading for a flat profit result, dragged down by currency fluctuations, in the first half of the 2017 financial year.

In profit guidance for the six months to the end of January, the company says net profit after tax will be approximately $NZ9.9 million ($A9.4 million) compared to $NZ9.4 million ($A9 million) in the same six months last year.

Total sales for will be about $NZ196.3 million ($A187.6 million) compared to $196 million ($A187 million) for the same prior period, an increase of 0.1%.

However, same store sales growth was 3.4% for the 26 weeks to January 29 when smoothing out the numbers for the impact of currency fluctuations.

“Despite gross margin pressure in the first half from foreign currency, we were able to grow our earnings through healthy same store sales growth in our largest market, rigorous cost control and working capital efficiency,” says CEO Xavier Simonet.

Sales in Australia, at $A121 million, were up 6% in Australian dollar terms. But sales in New Zealand, at $NZ68.8 million ($A65.7 million), were up just 0.9%.

The results were also impacted by the winding down of UK operations.

The company in November said sales were being hit by the impact of a stronger US dollar. In the first 15 weeks of the financial year, total sales were up 2.8%, but were down 0.6% after the impact of exchange rates.

In September the company posted a 64% rise in annual after tax profit to $NZ33.5 million ($A32.5 million). The result was on a 4% rise in sales to $NZ425.6 million ($A413 million) at its 162 stores, reflecting cost cutting and better margins.

The retailer in 2015 posted a 51.7% drop in profit to $NZ20.4 million ($A19.8 million) after a series of sales promotions which confused customers.

Kathmandu will release the full result for the half year on March 21.

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