KMD shares sink more than 5% on softening demand

The news: Apparel retailer KMD Brands has posted a slight drop in full-year profit as rising cost pressures softened demand from consumers in the fourth quarter.

The numbers: The ASX and NZX-listed company reported statutory profit of NZD36.6 million ($33.7 million) for the year to 31 July, down 0.6% from a year ago. However, group sales hit a record NZD1.1 billion, a 12.6% increase from the previous year, while gross margin improved by 20 basis points. KMD will pay a final dividend of 3 NZ cents per share.

The context: The retailer said its Rip Curl and Oboz brands performed strongly through the year, but increased cost-of-living pressures and the warmest winter on record in Australia weighed on sales of its key Kathmandu brand, particularly in the last quarter. So far in FY24, group sales for August were down 6.4% from last year, with the downward trend in Kathmandu sales continuing.

What they said: "Despite the challenging consumer sentiment, we expect tailwinds with the continued return to travel, positive impact from the launch of innovative products and the outdoor lifestyle trend post-pandemic,” Group CEO Michael Daly said.