This morning outdoor adventure wear and equipment business Kathmandu Holdings Ltd (ASX: KMD) posted a net profit of NZ$33.5 million on sales of NZ$425.6 million for the full year ending July 31 2016. The profit and sales are up 64 percent and 4 percent over the prior corresponding period.

The company will pay a final dividend of NZ 8 cents per share to take the full year dividend to NZ 11 cents.

The result was an improvement over a prior year that was characterised by falling margins and what the company claimed was unfavourable weather. This year though same-store sales were up 2.6% on a local currency basis in its primary Australian market and management took the credit. The improvement attributed to “careful management of promotional activity” as “product newness” helped support rising gross margins.

Over the year the company opened four new stores in Australia and one in New Zealand. It also accelerated its retreat from the loss-making UK market with three stores closed to leave it on the brink of exiting the country altogether.

Overall it was a reasonable year for Kathmandu although it was cycling off a weak FY15 and the lumpy earnings results mean its share price chart has more ups and downs than a Himalayan footpath. Investors then should ask themselves whether Kathmandu can find a route to consistent earnings growth?

Much will depend on consumer confidence and brand positioning amidst a competitive environment that includes US giant The North Face. It has recently cranked up its physical move into Australia with more store openings in the likes of Sydney and Melbourne. While others also compete across Kathmandu’s product range on a lower cost basis.

Kathmandu itself plans to look for growth via more online sales overseas and also flagged that it will be “exploring opportunities for Kathmandu to further expand into international markets in FY2017”. Given the disastrous track record in the UK this looks a high-risk strategy with the company flagging that the “profitable Australasian business provides the foundation for this initiative”.

Selling for $1.96 the stock is not especially expensive, but I think investors may be better off looking elsewhere for consistently strong long-term returns.

If you are interested in quality dividend shares, then I would recommend this top dividend share instead. A strong yield and potential share price gains make this a great investment idea in my opinion.

Our Top Dividend Stock for 2016

Our resident dividend expert names his Top Dividend Share for 2016. Not only are the shares dirt cheap, the company is trading on a fat fully franked dividend yield. Simply click here to gain access to this comprehensive FREE investment report, including the name of this fast growing ASX dividend share. No credit card required!

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

Motley Fool contributor Tom Richardson has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.