The share price of Kathmandu Holdings Ltd (ASX:KMD) has had an impressive run over the past 12 months rising from $1.99 to $3.28 today. However, is there further upside from the current price?
Kathmandu is a leading brand and vertical retailer of clothing and equipment for outdoor, travel and adventure in Australia, New Zealand, and the UK. The company currently has 143 stores. Since listing in 2009, sales have increased from $215m to $384m in FY13. Net profit was 11% higher in 1H FY14 compared to FY13.
It is currently embarking on an aggressive store roll-out and is targeting the opening of 180 stores in Australia and New Zealand. Further, its new store format enables it to maximise market share through optimising existing store locations.
In 2013, its Summit Club membership program reached one million members, and in 2014 it commenced shipping its products internationally. It has experienced a rapid increase in online sales over the past three years, growing at over 85% per annum, with online sales now making up almost 5% of revenue. The online offering and international shipping program opens the company up to 144 million new potential customers. The strength of the Summit Club program demonstrates the strong brand recognition it has in the international market. Therefore, if it can continue to successfully expand internationally and grow its Summit Club program, the long-term growth prospects look strong.
Kathmandu pays a solid dividend yield of 3.7% and trades on a price earnings ratio of 14 times earnings. Although it is currently not a screaming buy, the growth profile looks attractive over the medium and would be a worthy addition to a growth portfolio. Investors would be best to wait for any pullback in the share price before buying the stock.