Kathmandu (ASX:KMD) share price on watch after COVID lockdowns hit sales

COVID-19 is impacting this retailer again…

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The Kathmandu Holdings Ltd (ASX: KMD) share price could come under pressure this morning.

This follows the release of a trading update by the adventure retailer this morning.

What did Kathmandu announce?

According to the trading update, Kathmandu has been negatively impacted by the recent announcement of additional COVID-19 restrictions in New South Wales.

The release notes that a number of its retail stores have suffered renewed disruption to trading from COVID-19 lockdown restrictions in Australia. At present there are 40 stores currently closed in New South Wales for a minimum of two weeks, and 26 further stores closed in Western Australia for a minimum of 4 days from today. This follows a two-week lockdown in Victoria which impacted 62 stores in early June.

Prior to this, the company had been trading broadly in line with pre-COVID-19 levels.

What will the financial impact be?

Based on currently announced restrictions, Kathmandu expects to fall short of its sales and earnings expectations in FY 2021. It is now forecasting sales of NZ$930 million and underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of NZ$120 million.

Management estimates that the impact of the New South Wales and Victorian lockdowns and associated movement restrictions will be ~NZ$13 million on EBITDA. However, it has warned that uncertainty remains due to the evolving COVID-19 situation in Australia, and this expectation is subject to change.

Kathmandu’s CEO, Michael Daly, commented: “COVID-19 continues to be a disrupting factor, in particular for Australasia during the key trading period for Kathmandu. Excluding these impacts, Kathmandu had a solid start to the winter season, and Rip Curl sales momentum continues. Trading conditions in the Northern Hemisphere for both Rip Curl and Oboz are particularly strong across our online, retail and wholesale channels, as our Group benefits from a diversified mix of channel and geographies.”

The Kathmandu share price is up 25% year to date.

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