KMD shares slump on earnings hit
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More news: Shares in KMD Brands have slumped more than 5% to 37 cents on the ASX after the apparel retailer flagged a sharp drop in full-year earnings as sales continued to drag in the second-half.
Full-year underlying earnings are now forecast to come in at NZ$50 million ($46 million), down from NZ$105.9 million in FY23.
KMD Brands flag lower FY earnings amid sales slump
The news: Apparel retailer KMD Brands has flagged a sharp drop in full-year earnings as its sales continued to be weak in the second-half amid cost of living pressures.
The numbers: The ASX and NZX-listed company now expects underlying earnings of NZD50 million ($46 million) for FY24, compared to NZD105.9 million in FY23.
Group sales for the first four months of the second half were down 8.4%, but an improvement on the 14.5% decline for the first-half ended 31 January.
Sales at its key Kathmandu brand were down 8.4% compared to 21.5% in the first half, while sales for surfing label Rip Curl were down 5.9% compared to 9.2%. However, footwear brand Oboz saw sales drop 21.8% compared to 20% in the first half.
The context: Chief executive Michael Daly said the group is seeing a prolonged impact of cost-of-living pressures on consumer sentiment globally but particularly in New Zealand, and was continuing to respond tactically to competitive market dynamics.
The group is now counting on the next six-week peak trading period for Kathmandu winter sales and Rip Curl summer sales in the northern half. KMD said it has taken pre-emptive action with the support of its banking group to lower the fixed-charge coverage ratio (FCCR) covenant for the next three measurement points with funding headroom of about NZD200 million at 31 July.
What they said: "Alongside immediate trading priorities, our focus remains on tightly controlling operating costs, moderating working capital, and maximising cash flows," Daly said.
The source: ASX announcement
