KMD Brands shares higher on improving sales trend
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More news: Shares in KMD Brands are up 2% to 38.25 cents each despite the apparel retailer flagging a slide in half-year earnings.
Investor sentiment is likely buoyed by an improvement in the sales trend at its key brands since first quarter numbers were unveiled in November.
The company said direct-to-consumer sales for its three brands are either in line or have improved although the wholesale channel sales have continued to decline.
KMD Brands flags half-year earnings slump
The news: Apparel retailer KMD Brands has flagged a slide in half-year earnings as weaker trading, particularly in its wholesale business, continues to weigh.
The numbers: The ASX and NZX-listed company expects underlying earnings for the first half to be in the range of NZD1 million ($0.9 million) to NZD3 million, down from NZD15.1 million a year ago.
For the first five months to December, overall sales at its key Kathmandu brand were down 0.4% from a year ago, while surfing label Ripcurl and footwear brand Oboz saw sales drop 2.9% and 7.7% respectively.
The context: The earnings warning comes despite an improvement in the sales trend at its key brands since first quarter numbers were unveiled in November. The company said direct-to-consumer sales for its three brands are either in line or have improved.
However, the wholesale channel has continued to decline, as traders remain cautious in pre-season commitments in a challenging market.
The company said Rip Curl and Kathmandu gross margins have been resilient despite promotional activity and a tough trading environment, while Oboz's clearance of inventory contributed to lower gross margins year on year.
The source: ASX announcement
