Kathmandu (ASX:KMD) share price slumps despite 36% earnings surge

Shares in the Kiwi retailer are on a downward trek after the group’s FY21 results release.

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The Kathmandu Holdings Ltd (ASX: KMD) share price is falling this morning despite reporting a 35.9% surge in full-year underlying earnings.

Kathmandu share price slumps as earnings surge 36%

The Kiwi retailer this morning reported its results for the year ended 30 June 2021 (FY21). Some of the key takeaways include:

  • Sales up 15.1% on the prior corresponding period (pcp) to $922.8 million
  • Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) up 35.9% to $113.3 million
  • Gross margin up 40 basis points (bps) on pcp to 58.7%
  • Underlying net profit after tax (NPAT) up 110.2% on pcp to $66.3 million
  • Underlying operating cash flow of $93.3 million

The Kathmandu share price is falling this morning amid a broader market decline, even as the company announced a 3 cents per share final dividend after declining to pay anything in FY20.

What happened in FY21 for Kathmandu?

FY21 was a big year for the Kiwi retailer as it grappled with the knock-on effects of COVID-19. The Kathmandu share price has managed to climb higher in the past 12 months despite the pandemic.

The company reported a 31.3% jump in online sales growth for its Ripcurl brand during the year. That strong performance came in the first full year of operations following the November 2019 acquisition.

Kathmandu launched its Oboz footwear brand in April 2021 and recorded double-digit growth in its forward wholesale order book in FY21. The company also reported the successful relaunch of its flagship Kathmandu in May 2021.

The company also committed to the largest sustainability-linked loan in New Zealand as part of its core environmental, social and governance (ESG) commitment during the year.

What did management say?

CEO and Managing Director Michael Daly said:

We are proud of the results we have been able to produce over the past 12 months in the face of ongoing COVID challenges, delivering strong sales and positioning the business for sustained growth.

While Kathmandu has felt the impacts of COVID related travel restrictions, we were pleased with the early momentum following the brand relaunch in May 2021.

Our refreshed Group strategy ensures we are focused on the things that matter most as we move into FY22 — building global brands focused on active outdoor activities, investing in digital platforms to provide consumers with a truly world class unified commerce experience, operational excellence and sustainability [ESG] leadership.

How has the Kathmandu share price performed recently?

2021 has been a good year for shareholders so far. The Kathmandu share price is up more than 15% year to date including almost 12% in the last month alone.

At the time of writing, Kathmandu shares are trading hands for $1.375, a fall of 3.85% on yesterday’s closing price.

The company has a market capitalisation in excess of NZ$1 billion at the time of writing.

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Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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