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Kathmandu bounces back as profit soars

AAP logoAAP 3/08/2016 By Petrina Berry

Outdoor clothing and equipment retailer Kathmandu has flagged a big rise in full year profit after cutting costs, buying less products and doing away with aggressive discounting.

Kathmandu expects net profit for the 12 months to July 31 jumped as much as two thirds to between $NZ33 million and $NZ34 million ($A31.1 million and $32.0 million).

This is a substantial improvement on the previous year's 52 per cent profit slump to $NZ20.4 million, due to excess stock and aggressive discounting.

"We have bought more cautiously this year," chief financial officer Reuben Casey told AAP.

"We have had to adjust to lower levels of sales growth."

The company has sacrificed some revenue growth for better gross profit and did not offer as big a discount on some categories as it has previously, he said.

Shoppers have responded to new products and promotions, and cost cuts and capital management have helped boost the company's cash flows, in a sign a turnaround is on track, Mr Casey added.

"It is a good bounce back from last year's result but the job is not done yet," he said.

"We still have some way to go to return to the profitable levels we once had."

Annual sales rose four per cent to $425.5 million, with same-store-sales climbing 1.6 per cent at constant exchange rates.

Investors were pleased with the profit forecast, sending Kathmandu shares up six cents, or 3.6 per cent, to $1.74, their highest level in 18 months.

Kathmandu, which fended off a hostile takeover bid from New Zealand retailer Briscoe Group in 2015, will release its finalised full year results on September 21.

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