Shares in KMD Brands Ltd (ASX: KMD) were trading higher after the company posted a sizeable increase in sales for the first half of the year.
In a statement to the ASX on Monday morning, the company said that sales at its Rip Curl stores were up 5.6% for the five months to December 25 compared with the same period the previous year, and were up 12.9% across its Kathmandu stores.
Sales of its Oboz footwear line were up 4.5% for the period.
Its total group sales were 7.9% higher for the first five months of the year.
Outlook positive
The company went on to say:
Group wholesale sales for the five months of FY26 year-to-date are 9.4% above last year. Forward wholesale order books remain stable and slightly above last year. In-season buying from key accounts has also been positive.
The company said its group gross margin year to date was 56.7%, which was about 100 basis points below the same period last year due to the increased amount of promotional activity, "and continued focus by all brands to optimise mix and sell through aged inventory''.
KMD Brands Managing Director Brent Scrimshaw said the company was performing well.
We are pleased with the group's early progress in the execution of its Next Level transformation strategy, in particular trading over the critical Black Friday and Christmas periods. Whilst we are still at the early stages of our transformation, we are encouraged by the improved performance of Kathmandu, with an adjusted flow of fresh innovation planned in the second half which we believe will strengthen our ability to expand gross margin over time. We continue to focus on optimising the balance between sales and gross margin while actively managing our inventory investment.
The company said that it expected first half underlying EBITDA to be in the range of $8 to $11 million, up from $3.9 million for the same period last year.
RBC Capital Markets said the market update was neutral for the company's shares, with the sales growth figures "tracking ahead of expectations across all segments, but "with consensus expectations currently at the top-end of KMD's EBITDA guidance we expect operating expenses are currently tracking ahead of expectations''.
KMD shares were 6.3% higher at 25.5 cents in early trade before settling back to be steady at 24 cents.
The company was valued at $160.1 million at the close of trade on Friday.
