KMD Brands (ASX: $KMD) 1H FY24 financial summary

KMD Brands Limited (ASX: $KMD) has released its 1H FY24 financial results, reporting a 14.5% decrease in group sales to $468.6 million. The company's gross margin improved by 10 basis points to 58.8%, while operating expenses were $15.8 million lower year-on-year. The underlying EBITDA stood at $15.1 million, down 66.8% due to lower sales, resulting in a statutory NPAT loss of -$9.7 million and an underlying NPAT loss of -$6.9 million. The company's net working capital decreased by 7.4% year-on-year to $226.2 million, and no interim dividend has been declared due to the 1H FY24 operating performance.

Executive Commentary on 1H FY24 Results

Group CEO & Managing Director Michael Daly commented, 'Through the first half we continued to experience the effects of weakness in consumer sentiment. Sales were 14.5% below last year's record result; and decreased for all three of our brands. Weaker consumer sentiment, the warmest winter on record in Australia, and an over-reliance on winter weight product led to a disappointing first half for Kathmandu. Rip Curl and Oboz are cycling record sales last financial year, and while revenues from the direct-to-consumer channel are showing single digit declines, the wholesale channel has been more challenging for both brands as wholesale customers reduce inventory holdings.'

Summary of 1H FY24 Results and Outlook

KMD Brands Limited reported a challenging 1H FY24 with a significant decrease in group sales, particularly for the Kathmandu brand. The company's gross margin improved, and operating expenses were well controlled despite inflation pressure. The outlook for the second half of the year indicates improved sales trends for all three brands. The Group expects to see progress in the second half and into FY25, with a focus on improving Kathmandu's sales performance and a more positive FY25 outlook in the wholesale channel for both Rip Curl and Oboz. The company believes that with its portfolio of iconic global outdoor brands and leadership in sustainability, it remains a unique investment proposition and well-placed for the future.