KMD Brands FY26 Sales to Reach NZ$1.04 Billion with EBITDA Doubling
KMD Brands expects a 5% rise in FY26 sales and a more than doubling of EBITDA, while planning to divest its Southeast Asian manufacturing facility over the next year.
- FY26 sales guidance of NZ$1.04 billion, up 5%
- Underlying EBITDA forecast to increase 123%
- Kathmandu sales growing, Rip Curl facing headwinds
- Net debt to rise due to supplier terms and inventory
- Planned divestment of Southeast Asian manufacturing site
FY26 Sales and Earnings Outlook
KMD Brands Limited (NZX/ASX:KMD) is anticipating group sales for the 2026 financial year to land between NZ$1.04 billion and NZ$1.044 billion, marking a 5% increase on FY25 at the midpoint. More strikingly, the group’s underlying EBITDA is expected to more than double, rising 123% to a range of NZ$38 million to NZ$41 million.
This surge in earnings is driven largely by the Kathmandu brand, which recorded a 4.8% lift in direct-to-consumer same store sales in the first 24 weeks of the second half, including online channels. Strong demand in rainwear, fleece, and base layers underpinned this growth, although insulation sales were dampened by unusually warm winter weather on Australia’s east coast. New Zealand trading outperformed Australia during this period.
Rip Curl and Oboz Performance Diverge
Rip Curl continues to face challenges amid subdued consumer sentiment in Australia and aggressive competitor promotions, resulting in a 2.8% decline in same store sales. The weakening of favourable foreign exchange rates in Q4 FY26 also weighed on results. Conversely, Oboz has returned to year-on-year growth in Q4, buoyed by strong online sales and a steady introduction of new products.
Balance Sheet and Working Capital Dynamics
The group’s net debt is projected to rise to between NZ$63 million and NZ$66 million by the end of July 2026, up from NZ$52.8 million in July 2025. This increase is attributed to changes in supplier payment timing and a strategic investment in working capital aimed at securing inventory amid potential global supply chain disruptions linked to geopolitical tensions. Despite the higher leverage, KMD confirmed it will remain compliant with all bank covenants under its new facility at the end of the month.
Manufacturing Facility Divestment and Business Review
KMD announced plans to divest its Southeast Asian manufacturing facility, with a phased wind-down of production over the coming 12 months. The sale is expected to generate net property proceeds between NZ$5 million and NZ$7 million and release approximately NZ$6 million in working capital, which will bolster the group’s balance sheet. This move forms part of a broader business review, which is progressing and expected to conclude with the FY26 Annual Results announcement on 23 September 2026.
Bottom Line?
KMD’s strong EBITDA guidance and manufacturing divestment signal a strategic pivot, but the elevated net debt and Rip Curl’s ongoing struggles warrant close attention.
Questions in the middle?
- How will the divestment of the manufacturing facility affect KMD’s supply chain resilience and cost structure?
- Can Rip Curl reverse its sales decline amid competitive pressures and soft consumer sentiment?
- What strategic initiatives will emerge from the business review to sustain KMD’s growth momentum?
