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Kathmandu share price one to watch tomorrow as institutional interest wanes

The Kathmandu Holdings Ltd (ASX: KMD) share price will be on watch when its current trading halt lifts tomorrow, after the retailer failed to max-out its NZ$145 million institutional entitlement offer.

What did Kathmandu announce today?

Kathmandu announced the successful completion of its 1-for-4 fully underwritten pro-rata accelerated entitlement offer of fully-paid ordinary shares.

The company’s institutional entitlement offer closed on Wednesday with the Aussie retailer announcing that eligible investors elected to take up 88% of their entitlements under the offer and 92% of eligible institutional shareholders took up their entitlements in full.

According to the update, a bookbuild for the unfulfilled entitlements will close today, and the retail entitlement offer will open this Friday.

Kathmandu shareholders will be able to subscribe to the 1-for-4 entitlement offer at A$2.37 per share up until Monday 21 October.

What else has Kathmandu announced recently?

The Kathmandu share price has rocketed 16% higher in a matter of weeks after the Aussie retailer posted a bumper full-year earnings result.

On 18 September, Kathmandu posted a net profit after tax of NZ$50.5 million (A$47.2 million) for the year ended 31 July 2019, up 32.9% on the prior corresponding period.

Company sales jumped 11.7% year-on-year to NZ$497.4 million (A$464.5 million) while operating cash flow climbed higher to NZ$75.6 million (A$70.6 million).

The record result came in-line with guidance but still boosted shareholders’ hopes higher in September with the Kathmandu share price currently trading just shy of its 52-week high of $3.06 per share.

Should you buy Kathmandu shares?

The company’s full-year results demonstrate that Aussie retail is far from over, with the outdoor company continuing to boost sales higher.

However, the Kathmandu share price remains down on the $3.49 per share high it hit back in May 2014, meaning it’s not all smooth sailing for Kathmandu investors.

With a 5.15% per share dividend yield, Kathmandu may be a good option for income but I wouldn’t be banking on the company’s share price for further capital gains in the next 12–18 months.

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Motley Fool contributor Kenneth Hall 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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