Why the Kathmandu Holdings Ltd (ASX:KMD) share price raced 20% higher today

The Accent Group Ltd (ASX: AX1) share price isn’t the only one in the retail sector flying higher today.

Outperforming even Accent Group is the Kathmandu Holdings Ltd (ASX: KMD) share price which has surged 20% higher to $2.79 in early trade.

Why are Kathmandu’s shares rocketing higher?

The outdoor retailer is holding its annual general meeting in Auckland today and ahead of the meeting released a trading update.

According to the release, sales for the first 15 weeks of FY 2019 are up 8.4% on a constant currency basis excluding the recently acquired Oboz business.

This has been driven by an impressive increase in same store sales in both the Australian and New Zealand markets.

During the period same store sales were up 7.1% in Australia and 5.2% in New Zealand. Combined, this equates to same store sales growth of 6.3% for Kathmandu on a constant currency basis.

Kathmandu’s chief executive officer Xavier Simonet advised that the company has continued to experience strong demand for its core products, following a strong winter period.

He also provided an update on the first quarter performance of the US-based Oboz business that it acquired earlier this year for a base cash consideration of US$60 million, plus an earn-out of up to US$15 million.

Oboz achieved sales of NZ$15.7 million in the first quarter with a gross margin of 39.8%. It remains on track to achieve the US$7.1 million EBITDA earn-out target for the 2018 calendar year.

Looking ahead, Simonet appears optimistic that the company will deliver a solid first half result following this positive start.

He said: “We have achieved good sales growth leading into the key Christmas trading period, and we expect first half profit to be strongly above last year. However, as always our first half-year result is highly dependent on the success of our Summer Sale.”

Should you invest?

Despite its strong share price gain today, Kathmandu’s shares are still changing hands at just 12x trailing earnings.

I think that this is undemanding given its solid performance this year and positive outlook over the coming years. Especially given the good performance of the Oboz business.

Overall, I would class it as a buy with Accent Group and Super Retail Group Ltd (ASX: SUL).

Missed these gains? Then don't miss these blue chips that have been tipped for big things.

Top 3 ASX Blue Chips To Buy For 2019

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 2019."

Each one pays a fully franked dividend. 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 Super Retail Group Limited. The Motley Fool Australia has recommended Accent Group. 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!