ASX All Ords stock KMD Brands Ltd (ASX: KMD) is taking a tumble today.
Shares in the retail company, formerly known as Kathmandu, closed yesterday trading for 48 cents. In morning trade on Tuesday, shares are swapping hands for 47 cents apiece, down 2.1%.
For some context, the All Ordinaries Index (ASX: XAO) is up 0.2% at this same time.
This comes following the release of KMD's half-year results for the six months ending 31 December (1H FY2024).
Here's what KMD reported.
(*Note, dollar figures quoted below are in New Zealand dollars.)
ASX All Ords stock sinks amid sliding sales
- Group sales of $468.6 million, down 14.5% year on year
- Underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) of $15.1 million, down 66.8% year on year
- Underlying net profit after tax (NPAT) loss of $6.9 million
- No interim dividend declared; last year was 2.4 cents per share
What else happened with KMD over the half year?
On the plus side of the ledger, though failing to boost the ASX All Ords stock today, KMD reported a 0.10% improvement in gross margin to 58.8%. This was driven by lower freight rates, improved channel mix, improved pricing, exiting low margin business, and new product introductions.
And operating expenses came down by 5.7% compared to 1H FY2023, to $15.8 million.
Still, this wasn't enough to overcome weaker consumer spending and the hit the company's sales took from an unseasonably warm winter in Australia and New Zealand.
As at 31 January, the ASX All Ords stock had a net debt position of $96.2 million with funding headroom of approximately $190 million.
What did management say?
Commenting on the half-year results pressuring the ASX All Ords stock today, CEO Michael Daly said:
Weaker consumer sentiment, the warmest winter on record in Australia and an over-reliance on winter weight product led to a disappointing first half for Kathmandu.
Rip Curl and Oboz are cycling record sales last financial year, and while revenues from the direct-to-consumer channel are showing single digit declines, the wholesale channel has been more challenging for both brands as wholesale customers reduce inventory holdings.
In a challenging sales environment, the group improved gross margin despite currency headwinds, controlled operating costs, and reduced working capital.
What's next?
Looking to what could impact the ASX All Ords stock in the months ahead, Daly said KMD's top priority was improving Kathmandu sales performance heading into the key winter trading months.
"We expect to see progress in the second half and into FY25 as we launch new innovative products, quick to market programs, elevated visual merchandising, increased personalisation through the recently released 'Out There Rewards' and an expanded third-party brand strategy," he said.
KMD also expects its wholesale customer inventory reduction cycle to end this financial year.
Daly said that gives the company "a more positive FY25 outlook in the wholesale channel for both Rip Curl and Oboz."
How has this ASX All Ords stock been tracking?
It's been a tough year for KMD shareholders.
Over the past 12 months, shares in the ASX All Ords stock are down 49%.
