KMD Brands Posts NZD 989M Sales, Faces NZD 28M Underlying Loss

FY25 Financial Performance Overview

KMD Brands Limited, the parent company of outdoor lifestyle brands Kathmandu, Rip Curl, and Oboz, released its audited results for the twelve months ending 31 July 2025. The Group posted a modest 1.0% increase in revenue to NZD 989 million, reflecting resilience in a challenging global retail environment. However, the underlying net profit after tax (NPAT) showed a loss of NZD 28.3 million, while statutory NPAT recorded a more severe loss of NZD 93.6 million, largely driven by a significant goodwill impairment of NZD 45.4 million related to the Oboz brand.

Gross margins declined to 56.5% from 58.4% the previous year, pressured by increased promotional activity aimed at maintaining market share amid heightened competition. Operating expenses rose 3.9% to NZD 541.6 million, reflecting global cost pressures despite tight management controls. The Group’s net debt position improved to NZD 52.8 million, supported by strong funding headroom of approximately NZD 235 million.

Brand Segment Highlights and Challenges

Rip Curl delivered a 2.1% sales increase to NZD 550.4 million, with direct-to-consumer (DTC) channels, including online sales, showing robust growth. Kathmandu’s sales were flat at NZD 361.9 million, with product category growth offset by warm weather impacting insulation sales. Oboz experienced a 3.5% sales decline to NZD 76.6 million, compounded by US tariffs that affected wholesale demand, though online sales surged 18.3% during key promotional periods.

The impairment charge on Oboz goodwill reflects the impact of US tariff increases and market volatility, with management adopting conservative assumptions in their valuation. This impairment is a non-cash item and excluded from underlying results.

Next Level Transformation Strategy

In response to the financial pressures and evolving market dynamics, KMD Brands launched its Next Level strategy, a comprehensive transformation program designed to reset the cost base, enhance product innovation, and accelerate digital and store portfolio initiatives. The strategy includes a targeted NZD 25 million cost reset, with an organizational restructure already underway delivering annualized savings of NZD 5 million.

Key priorities include re-focusing product innovation to balance technical performance with style and speed-to-market, re-energizing the store network with new segmentation and flagship concepts, and re-imagining digital capabilities through enhanced data intelligence and e-commerce platform rollouts across all brands.

Governance and Commitment to Ethical Practices

KMD Brands reaffirmed its commitment to high ethical standards and corporate governance, with a Board comprising six Directors, including five independent non-executives. The company maintains a robust Code of Ethics, Whistleblowing Policy, and Securities Trading Policy to ensure transparency and accountability.

The Group’s remuneration framework aligns executive incentives with long-term shareholder value creation, with over half of the Group CEO’s remuneration at risk and tied to performance metrics.

Modern Slavery Risk Management

KMD Brands published its 2025 Modern Slavery Statement outlining a comprehensive approach to identifying and mitigating risks of forced labour and child labour across its global supply chain. The Group sources products from high-risk regions including Bangladesh, China, Vietnam, and Indonesia, and employs rigorous due diligence processes including third-party audits, worker voice surveys engaging over 12,500 workers, and participation in multi-stakeholder initiatives such as the Fair Labor Association and the International Accord.

The company emphasizes transparency by publishing tier 1 and tier 2 supplier data on the Open Supply Hub platform and invests in supplier training and capacity building to address identified risks. KMD Brands also integrates modern slavery risk management within its broader ESG strategy, certified as a B Corporation across all brands, and commits to continuous improvement in human rights practices.

Outlook and Market Positioning

Looking ahead to FY26, KMD Brands aims to return to sales growth and improve profitability through disciplined execution of the Next Level strategy. The Group targets flat operating expenses, margin expansion, and a reduction in net debt below NZD 40 million. Strategic store closures and new flagship openings are planned to optimize the retail footprint, while digital transformation efforts continue with the rollout of the Shopify platform across Rip Curl and Oboz.

Despite ongoing macroeconomic uncertainties and competitive pressures, the Board expresses confidence in the Group’s ability to leverage its iconic brands and enhanced operational model to deliver sustainable, profitable growth.