Why the Kathmandu Holdings Ltd share price has rocketed higher today

In morning trade the Kathmandu Holdings Ltd (ASX: KMD) share price has rocketed higher by almost 5% to $1.97.

Today’s gain means the specialist outdoor retailer’s shares have now risen a massive 37% in the last 12 months.

What happened?

This morning Kathmandu released its Macquarie Australia Conference presentation to the market.

Within the presentation the retailer provided a third-quarter trading update for the 13 weeks to April 30. This revealed an 11.9% jump in sales over the prior corresponding period in constant currency terms (9.3% at actual exchange rates).

Impressively, same store sales for the same period were up 11.5%. As a result, its same store sales growth so far in FY 2017 has now jumped up to 6%.

Management has pointed to new product launches and improved promotional execution on the strong performance.

Should you invest?

At approximately 12x trailing earnings Kathmandu certainly looks to be great value for investors. But the all-important fourth quarter is still to come, so I wouldn’t get excited just yet.

Whilst things are definitely improving, its June/July promotional event is by far the biggest contributor to its full-year result.

If the company fails to execute the event successfully or there is unseasonably warm winter weather, there’s a good chance it will fall short of expectations and its share price could suffer.

Because of this I would stay clear of Kathmandu for now and focus on other retail shares such as Bapcor Ltd (ASX: BAP) and Premier Investments Limited (ASX: PMV).

Alternatively, this other retail share and its MASSIVE dividend could be an even better investment option.

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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Premier Investments Limited. Motley Fool contributor James Mickleboro has no position in any stocks mentioned. The Motley Fool Australia owns shares of Bapcor. 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.

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