What's happened: Outdoor travel and adventure retailer Kathmandu Holdings Ltd (ASX: KMD) has seen its share price hammered on Monday morning after it forecast a loss for its first half operations, ending 31 January 2015.
The shares plunged as much as 25.67% (48 cents) to hit a fresh two-year low of $1.39. They've now fallen 64% since peaking in May last year.
Why it's happened: In a preliminary trading update released to the ASX today, Kathmandu forecast a first-half loss of between NZ$1-2 million (compared to last year's $11.4 million profit), flagging a weak trading performance during the key Christmas and January periods as the key reason behind the result.
The company said that heavily discounted sales in the first quarter not only resulted in a reduction in margins across the entire half, but also led to a reduction in second quarter sales. It advised that total group sales for the half would be 6.9% higher than the prior corresponding period – a result which was below expectations.
Kathmandu's management did not provide full-year guidance, but investors should note that the company typically generates the majority of its earnings in the second-half. In the announcement, Kathmandu's acting CEO Mark Todd said: "Successful execution of our key sales promotions in Easter and Winter are core to our overall earnings performance for the full year… as historically over 60% of Kathmandu's sales are made in this period."
