KMD Brands 1H FY24 Preliminary Result Overview

KMD Brands Limited (ASX: $KMD) has released its preliminary results for the half year ended 31 January 2024. The Group anticipates a decrease in sales by approximately 14.5% compared to the previous year, with expected sales of around $469 million. Despite the challenging consumer sentiment, the group's gross margin remains resilient at 58.8%. Operating costs have decreased by $16 million from the previous year, and the group's underlying EBITDA for 1H FY24 is projected to be in the range of $14 million to $16 million.

Executive Commentary on 1H FY24 Performance

Group CEO & Managing Director Michael Daly acknowledged the challenging start to the year, attributing it to weakening consumer sentiment. He highlighted the impact on specific brands, mentioning that Rip Curl and Oboz are experiencing declines in the direct-to-consumer channel and wholesale channel. Daly expressed optimism for a more positive FY25 outlook in the wholesale channel as the inventory reduction cycle is expected to conclude. Regarding Kathmandu, Daly noted softer trading results since June 2023 due to weaker consumer sentiment and unseasonably warm weather in Australia. He outlined the strategies to improve sales performance, emphasizing the launch of new innovative products, quick-to-market programs, elevated visual merchandising, increased personalization through the 'Out There Rewards,' and an expanded third-party brand strategy. Daly concluded by emphasizing the team's focus on delivering sales improvement, optimizing gross margin, controlling operating costs, and reducing working capital.

Summary of 1H FY24 Preliminary Result and Outlook

KMD Brands Limited's preliminary results for 1H FY24 indicate a decrease in sales, resilient gross margin, and lower operating costs despite ongoing inflationary pressures. The Group anticipates an underlying EBITDA in the range of $14 million to $16 million. CEO Michael Daly highlighted the challenges faced by specific brands and outlined strategies to improve performance, expressing optimism for a more positive FY25 outlook in the wholesale channel. The Group aims to focus on delivering sales improvement, optimizing gross margin, controlling operating costs, and reducing working capital. KMD Brands will release its full results for the six months ended 31 January 2024 on Tuesday 19 March 2024, with a briefing session for investors and analysts scheduled for the same day.