Kathmandu Holdings Ltd shares climb higher on trading update

In morning trade the Kathmandu Holdings Ltd (ASX: KMD) share price has got off to a bright start and edged 2% higher to $2.26.

This means the outdoor and winter sports retailer’s shares have risen 25% since this time last year.

What happened?

This morning Kathmandu released a trading update which revealed its expectations for the first-half.

According to the release, management expects to report group net profit after tax of no less than NZ$12 million for the first-half of FY 2018. This will be 20% higher than the NZ$10 million it achieved in the prior corresponding period.

Considering total sales are up just 4% to NZ$204 million during the half, it appears as though management has been able to achieve a sizeable increase in its margins.

Kathmandu’s CEO Xavier Simonet stated: “Striking the right balance in the key Christmas trading period between generating sales growth and improving our gross margin has fuelled healthy earnings growth. We have also continued to strengthen our balance sheet position during the first half.”

In Australia, its largest market, same store sales grew by a solid 1.9% on constant currency terms. Disappointingly, it wasn’t quite as positive over in New Zealand where same store sales declined 6.4% during the period.

Kathmandu will release the full result for the half-year on Tuesday 20 March 2018.

Should you invest?

I’ve been very impressed at the way Kathmandu has turned around its performance over the last 12 months.

As of yesterday’s close, its shares were changing hands at 12.5x trailing earnings. I think this could be cheap for a company growing its bottom line by at least 20% in the first-half.

In light of this, I think Kathmandu could be worth a look today. However, investors may want to hold out until its results release when management is likely to provide its full-year guidance.

In the meantime, retail shares such as Noni B Limited (ASX: NBL), Premier Investments Limited (ASX: PMV), and Lovisa Holdings Ltd (ASX: LOV) could be worth a closer look.

Alternatively, these high-flying growth shares could be in the buy zone today if you ask me.

Top 3 ASX Blue Chips To Buy In 2018

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2018."

Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.

The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Premier Investments Limited. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

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 Financial Services Guide (FSG) for more information.