Why Kathmandu Holdings Ltd shares soared on upgraded profit guidance

Shares in small cap adventure equipment company Kathmandu Holdings Ltd (ASX: KMD) have rocketed up 15.5% to $2.68 at the time of writing off the back of upgraded EBIT and NPAT guidances.

Kathmandu today reported an upgrade to its sales performance and forecast earnings for the year ended July 31 2018, with EBIT up to between $72 million and $77 million from last year’s $57 million and NPAT up to between $48 million and $52 million from last year’s $38 million.

And the good news rolls on, with sales for the year-to-date up 7.7% on last year and Kathmandu’s gross profit margin 2.4% above its previous year – it’s little wonder Kathmandu’s trading volumes so far today are already well above average.

Kathmandu is very much a discretionary retailer, in the same realm as the likes of other emerging players like Lovisa Holdings Ltd (ASX: LOV) whose shares are up 1% at the time of writing to $11.92.

Similarly, Noni B Limited (ASX: NBL) is travelling well of late, with its shares up 1.1% to $2.97 at the time of writing.

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Motley Fool contributor Carin Pickworth has no position in any of the 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 Scott Phillips.

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