KMD Brands reports mixed sales across its portfolio with a notable rebound in Kathmandu’s direct-to-consumer sales and robust online growth, while managing tariff uncertainties and margin pressures.
- Kathmandu direct-to-consumer sales up 13.2% in early June, offsetting earlier declines
- Rip Curl direct-to-consumer sales grow, but wholesale remains below prior year
- Group online sales surge 10.7% year-to-date, boosted by new Kathmandu platform
- Gross margin down 140 basis points amid competitive pressures
- FY25 EBITDA guidance set between NZ$15 million and NZ$25 million with net debt around NZ$70 million
Mixed Brand Performance Amid Challenging Conditions
KMD Brands Limited has released a trading update for the ten months ending May 2025, revealing a nuanced picture across its three core brands, Kathmandu, Rip Curl, and Oboz. While the group’s overall sales are slightly down year-on-year by 0.5%, there are encouraging signs of resilience, particularly in direct-to-consumer channels.
Kathmandu’s sales have been notably volatile, largely due to unseasonably warm weather in Australia that dampened demand for insulation products. However, growth in other categories such as rainwear and fleece helped offset some of the softness. The recent shift to cooler weather has reignited momentum, with direct-to-consumer sales in the first 17 days of June surging 13.2% above last year, nudging year-to-date sales into positive territory.
Rip Curl and Oboz, Growth and Headwinds
Rip Curl continues to build on its direct-to-consumer sales growth, particularly in North American flagship stores, although wholesale sales remain below last year’s levels. Oboz wholesale sales have also lagged, but the brand’s online sales remain robust despite uncertainties linked to newly announced US tariffs. These tariffs are expected to impact FY25 EBITDA by approximately NZ$1 million, underscoring the ongoing challenges in the US market.
Digital Transformation Driving Online Growth
Online sales have emerged as a bright spot for KMD Brands, growing 10.7% year-on-year across the group. Kathmandu’s recent upgrade to its online trading platform has been particularly successful, delivering a 26.1% increase in online sales since May and setting a new sales record during a recent Australian public holiday. The group plans to extend this upgraded platform to Rip Curl and Oboz in the first half of FY26, aiming to further capitalize on digital sales channels.
Financial Outlook and Strategic Focus
Despite a 140 basis point decline in gross margin, KMD Brands is prioritizing cash flow generation and market share maintenance in a highly competitive environment. The group expects underlying EBITDA for FY25 to fall between NZ$15 million and NZ$25 million, with net debt projected at approximately NZ$70 million by the end of July 2025. Working capital management remains tight, with inventory levels expected to be lower than the previous year.
CEO Brent Scrimshaw acknowledged the challenges posed by weather volatility and tariff uncertainties but expressed confidence in the group’s brand strength and growth prospects. He highlighted ongoing initiatives aimed at unlocking future growth and improving medium to long-term performance, with further details to be shared at the upcoming Investor Day in September.
Bottom Line?
KMD Brands’ ability to leverage online growth and navigate external headwinds will be critical as it heads into a pivotal second half of FY25.
Questions in the middle?
- How will evolving US tariffs impact KMD Brands’ wholesale and online sales in FY26?
- What specific initiatives will KMD unveil at the September Investor Day to drive future growth?
- Can Kathmandu sustain its recent sales momentum amid ongoing weather unpredictability?