Kathmandu (ASX: $KMD) 1H FY24 Results Overview

Kathmandu (ASX: $KMD) has reported its 1H FY24 results, with $468.6m in sales, reflecting a 14.5% decrease from the same period in FY23. The gross margin improved by 10 basis points to 58.8%, while operating expenses decreased by 5.7% to $260.6m. The underlying EBITDA stood at $15.1m, marking a significant decline of 66.8% from 1H FY23. The net working capital reduced by 7.4% to $226.2m compared to January 2023.

Executive Commentary

The 1H FY24 results reflect a challenging consumer environment, with Kathmandu experiencing softer sales due to weaker consumer sentiment and warm winter conditions in Australia. However, Rip Curl and Oboz have shown resilience, cycling record sales from the previous financial year. The group's gross margin remained resilient, increasing by 10 basis points despite currency headwinds. Operating expenses were tightly controlled, benefiting from the restructuring implemented last year and lower variable costs associated with reduced sales.

Summary and Outlook

The 1H FY24 results presentation outlined the impact of the challenging consumer environment on Kathmandu's sales, while Rip Curl and Oboz demonstrated strength. The company's strategic pillars remain unchanged, focusing on building global brands, elevating digital platforms, operational excellence, and leading in environmental, social, and governance initiatives. Despite the short-term challenges, the company remains confident in its ability to drive towards its targets as consumer sentiment improves. The outlook for the second half anticipates improved sales trends, particularly for Kathmandu, as new innovative products are launched and an expanded third-party brand strategy is implemented. The group expects a more positive FY25 outlook in the wholesale channel as the wholesale customer inventory reduction cycle ends this financial year. With a commitment to sustainability and a unique investment proposition, Kathmandu (ASX: $KMD) remains well-positioned for the future.