You are using an older browser version. Please use a supported version for the best MSN experience.

Kathmandu forecasts better earnings

NZ NewswireNZ Newswire 29/06/2016 Tina Morrison

Kathmandu has raised its forecast for annual earnings as the outdoor equipment chain boosts margins from new products, better management of promotional activity and cost savings.

The Christchurch-based retailer expects net profit of $32 million to $35m in the year ending July 31, ahead of its previous forecast of $30.2m and up from $20.4m last year, it said on Thursday.

Same-store sales have increased 2.6 per cent in the 47 weeks ended June 26 on a constant currency basis.

Its shares soared 21 cents to a four-week high of $1.54, making them the best performer on the S&P/NZX 50 benchmark index on Thursday.

Kathmandu's annual profit halved last year as a build-up of inventory forced it into aggressive discounting at lower margins to rid itself of excess stock.

Under the management of new chief executive Xavier Simonet, who was appointed to the role in January 2015, the company is taking a more cautious approach to sales and keeping expenses under control.

"Despite the winter season starting late this year, product newness and careful management of promotional activity have resulted in a better than expected gross margin," Mr Simonet said.

"This combined with continued realisation of cost efficiencies has contributed to an improved FY2016 outcome."

Still, the company said "a substantial proportion" of sales and earnings this financial year are still dependent on trading in July, the final month of the financial year.

image beaconimage beaconimage beacon