KMD Brands’ EBITDA Set to Nearly Triple in First Half of FY26
KMD Brands reports strong sales momentum in the first five months of FY26, led by Kathmandu’s impressive growth in Australia and New Zealand, while EBITDA guidance signals a significant profit uplift.
- Kathmandu sales up 12.9% year-on-year
- Group wholesale sales increase 9.4% year-to-date
- Gross margin slightly down due to promotions but improved from prior half
- 1H FY26 underlying EBITDA expected between NZ$8m and NZ$11m
- Debt facilities extended and refinancing discussions underway
Strong Sales Momentum Led by Kathmandu
KMD Brands Limited has revealed a positive trading update for the first five months of its 2026 financial year, with sales growth driven predominantly by its Kathmandu brand. The outdoor apparel and equipment retailer reported a robust 12.9% year-on-year increase in total sales for Kathmandu, reflecting sustained consumer demand in both Australia and New Zealand. This growth was particularly evident during key retail periods such as Black Friday and Christmas, where direct-to-consumer channels flourished.
Rip Curl, another key brand within the group, also contributed to the sales uplift with a 5.6% increase year-on-year, buoyed by strong performance in North America. Meanwhile, Oboz showed mixed results but posted a 4.5% rise in total sales year-to-date, helped by a notable 21% jump in the November-December period.
Margins and Profitability Outlook
Despite the encouraging sales figures, KMD Brands experienced a slight dip in gross margin, down approximately 100 basis points compared to the previous year. This was attributed to elevated promotional activity and efforts to clear aged inventory. However, the current gross margin remains above the second half of FY25, indicating some progress in margin management.
The company projects a significant improvement in profitability, expecting underlying EBITDA for the first half of FY26 to range between NZ$8 million and NZ$11 million, up from NZ$3.9 million in the same period last year. This forecast underscores the early success of KMD’s “Next Level” transformation strategy, which aims to balance sales growth with margin optimisation.
Financial Position and Refinancing Plans
KMD Brands has taken steps to strengthen its financial position by extending its existing debt facility to April 2027 and reducing its syndicated bank facilities to approximately NZ$283 million. The group is currently in discussions with lenders regarding the refinancing of its long-term debt, with no covenant restrictions currently in place. Net debt is expected to be between NZ$85 million and NZ$90 million as of 31 January 2026, influenced partly by currency fluctuations.
CEO Brent Scrimshaw expressed cautious optimism about the company’s trajectory, highlighting the encouraging sales momentum and the planned introduction of fresh innovation in the second half of the year to further enhance gross margins. He emphasised the ongoing focus on inventory management and the careful balancing act between driving sales and protecting profitability.
KMD Brands is set to release its detailed half-year results on 25 March 2026, which will provide further clarity on the progress of its transformation and financial health.
Bottom Line?
KMD Brands’ strong start to FY26 sets the stage for a pivotal half-year, with margin recovery and refinancing outcomes in focus.
Questions in the middle?
- How will currency fluctuations impact KMD’s full-year financial results?
- What specific innovations are planned to boost Kathmandu’s gross margin in H2 FY26?
- What terms will emerge from ongoing debt refinancing discussions?
