Kathmandu Holdings Ltd shares climb on global growth plans

Kathmandu Holdings Ltd (ASX:KMD) posted its full year results today.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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.

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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »