KMD - Kathmandu

[Beagle]

Interesting article behind the pay wall on NBR this morning. Unseasonably warmer weather affects clothing sales. Mentions Kathmandu as one with potentially the most to lose with winter sales but also HLG, PPL Briscoes and WHS.

Must admit it has been very very mild, in fact out and about yesterday in Auckland's domain it felt like late spring. Temperatures as much as two degrees C higher than average for the last couple of months and very warm sea temperatures around N.Z. were mentioned supporting the proposition that all of May and perhaps even June will continue to be unseasonably mild.

Implications for HLG that have already admitted mild weather is affecting sales and PPL on just 9 cps and others...interesting times for retailers.

[Schrodinger]

Yes I have noticed that as well.

Thinking back to Rod Duke he is a pretty savvy retailer and I think him directing the show would be good for Kathmandu. Also buying/logistics synergies with his other brands. I also think he could leverage the community and increase their engagement with customers who are wanting advice on buying decisions.

He might return with another offer....

[huxley]

Bought some items recently online. Very impressed with the experience and the quality was pretty good. They could improve their overall presentation on the mail items but it was good overall.

The real gem is their online shop but I still think they need to "Amazon" the experience by building the feedback community for item reviews.

Here's a bit of info on their website for anyone who's interested..
One positive might come from leveraging the brand and selling into Europe etc via the Internet. Watch this space...

[huxley]

http://www.fronde.com.au/assets/CaseStudyDownloads/Fronde-Kathmandu-E-book-FINAL.pdf

[Schrodinger]

http://www.fronde.com.au/assets/CaseStudyDownloads/Fronde-Kathmandu-E-book-FINAL.pdf

Nice case study. They have the basic structure and GUI looking good. They just need now to get people to give product feedback that will make the site even more valuable.

[drcjp]

Close to 4% of company traded in last fortnight - something going on.

I'm not sure that one can read too much into the weather thing and sales. Winter will come and people will plan accordingly. I note that Myer reported subdued winter sales but they still hold to their bottom line forecasting: https://nz.finance.yahoo.com/news/myer-warns-fed-election-could-035607179.html;_ylt=AimSwSz43EUr1nc7zmNZkcL5K5NG;_ ylu=X3oDMTIyNTdsNmdkBG1pdANUb3BTdG9yeSBIdWJQYWdlIE 1EBHBvcwMzNARzZWMDTWVkaWFCTGlzdE1peGVkQ29sbGVjdGlv bkNBVGVtcA--;_ylg=X3oDMTBhMjY1ZDltBGxhbmcDZW4tTlo-;_ylv=3

The thing is, people buy other clothes than just winter gear and if the discounts are good enough (which KMD have been doing a lot of lately) and the stock is pitched right then one can carry on. It'll be interesting though.

[Hectorplains]

I'm not sure that one can read too much into the weather thing and sales.

Beg to differ. Slow sales, high inventories. Means you're forced in to 'discounting' early and reduced margins.

[huxley]

I'm not sure that one can read too much into the weather thing and sales. [/QUOTE]


Pretty much every communication from the company stresses the impact on the second half sales and in particular the winter promotions - just take a look at the announcements over the last few years. The brand is well positioned for the outdoors/winter market in Aust/NZ but the size of the market is largely dependent the weather.. I see customers putting off purchases for the foreseeable.. I still hold however since I think the long term growth of the catagory is positive e.g. people wanting to generally look after health & be more active etc etc.

[Ekrub]

http://www.thebull.com.au/premium/a/59965-is-kathmandu-undervalued.html

[winner69]

Those Independent Advisors were pretty clever last September saying KMD shares were worth $2.10 to $2.40

Maybe one day they will reach these lofty heights ....one day

[drcjp]

at least the weather is starting to play ball........and they have their new distribution service center on the go too: https://logisticsmagazine.com.au/kathmandu-and-dematic-to-develop-australian-industry-first-distribution-centre/

but I'm still not convinced all the transactions over the last month are related to performance of the company. A 20% drop with no news is too much, but that's just my opinion. We'll see if another offer appears...........

[babymonster]

I am still watching not sure I should buy some back.. Maybe jus before the ex-div date. People have doubts over kmd and me too.

[huxley]

Those Independent Advisors were pretty clever last September saying KMD shares were worth $2.10 to $2.40

Maybe one day they will reach these lofty heights ....one day

That was the rrp but they'll sell for less during their winter sale : D

[winner69]

That was the rrp but they'll sell for less during their winter sale : D

Good one

40% off sounds right

Do Summit Club members get an additional discount?

[winner69]

A big chill and a bit of snow and KMD share price surges .....almost shooting up like a rocket

Funny place this market

[drcjp]

A big chill and a bit of snow and KMD share price surges .....almost shooting up like a rocket

Funny place this market

and then its pounced on and drilled down again.....somebody is playing their hand here. Larger vols, no notices, no announcements. Somebody wants it low at announcement time...why remains to be seen.

[drcjp]

Actually, there is a notice: UniSuper in AUS instructed BNP Paribas and various fund mangers on 6 May to reduce their holding. Main seller is Discovery Asset Management.
Notice on Kathmandu and website ASX but no mention by NZX. http://www.kathmanduholdings.com/investor-relations/asx-announcements/

[smtrader]

I should shoot myself in the foot for not listening to my own advice.. i watched KMD fall so low (After of course taking a good loss from 2 years ago) and thought i should make some money back on it now and bought some more a few weeks ago.. looks like some more losses adding to my overall KMD loss!!!:mad ;:


Is there any prospects of this doomed share price improving into the foreseeable future.. or should i just move on??

[huxley]

A lot of retail stocks getting battered today, we'll just have to be patient.. Short term volitality is all down to this particular winter season.. I noticed quite a few KMD branded jackets on the way to work this morning ..

[drcjp]

I noticed the Tower Junction KMD shop chock a block on Sat.

[Sideshow Bob]

I noticed the Tower Junction KMD shop chock a block on Sat.

With stock, or with punters, or with both?

[drcjp]

Both, but I was only at TJ For about 45'

[Sideshow Bob]

Both, but I was only at TJ For about 45'

I think also have to look at the growth of Torpedo7. I get an email from them every day and here is an example from todays email -

http://www.torpedo7.co.nz/division/outdoor/picklist/14961?utm_source=email&utm_medium=email&utm_campaign=tuesday

You can get all different brands. Grown sales 13% in the last quarter - OK less than half the size of T7, but quite aggressive.

[smtrader]

I think also have to look at the growth of Torpedo7. I get an email from them every day and here is an example from todays email -

http://www.torpedo7.co.nz/division/outdoor/picklist/14961?utm_source=email&utm_medium=email&utm_campaign=tuesday

You can get all different brands. Grown sales 13% in the last quarter - OK less than half the size of T7, but quite aggressive.

What does Torpedo7 has to do with KMD?

[smtrader]

I noticed the Tower Junction KMD shop chock a block on Sat.

Yeah the Dunedin store was pretty full today at lunchtime when i drove by... not sure if its the sales or because it was freakin cold the past week here

[smtrader]

A big chill and a bit of snow and KMD share price surges .....almost shooting up like a rocket

Funny place this market

hahaha i know, i should ditch announcements and monitor the weather for this stock :D

[kiora]

What does Torpedo7 has to do with KMD?

Nought,Its owned by The Warehouse

[winner69]

Maybe Bob was saying that Torpedo 7 is taking business off Kathmandu

[smtrader]

Maybe Bob was saying that Torpedo 7 is taking business off Kathmandu

you know, now that i think about it.. i think thats what he was saying.. absolutely no reason why the SP jumped almost 5% today.. international investors unloaded almost a million worth this morning. at 1.44... i think around 1.40 is about right until we get some better announcements about sales/profits. Sell now while you can !!

[huxley]

you know, now that i think about it.. i think thats what he was saying.. absolutely no reason why the SP jumped almost 5% today.. international investors unloaded almost a million worth this morning. at 1.44... i think around 1.40 is about right until we get some better announcements about sales/profits. Sell now while you can !!

Or buy into the uncertainty and take advantage of others fear..

[smtrader]

Or buy into the uncertainty and take advantage of others fear..

Perhaps, but there's a reason why the gap is so wide between buyers and sellers (5cents) as off now.. maybe because only a few buyers seeing some opportunity (only $45,000 worth to be exact) pushing SP up by 5%.. i call that irrationality .. nothing fundamentally changed about the company since yesterday

[Sideshow Bob]

What does Torpedo7 has to do with KMD?

Alluding to that there is more competition coming from T7, that they are growing strongly - and that have a choice of brands/quality, including their own much of which is reminiscence of Kathmandu.

When KMD does $68m in sales in 6 months in NZ to January 2016. T7 did $34m in turnover in their last quarter. T7 sell a lot more things like bikes etc, but only have 10 stores, vs 40+ for Kathmandu.

[Hawkeye]

That's a little unfair... T7 have a much stronger online presence, and always have. I have not seen the T7 figures... have they increased profit much from the year before? I heard demand had been weaker than expected in previous years.

[smtrader]

That's a little unfair... T7 have a much stronger online presence, and always have. I have not seen the T7 figures... have they increased profit much from the year before? I heard demand had been weaker than expected in previous years.

Exponential growth actually for T7 Revenue
8065

After taking more than 30k+ in losses on KMD alone i concluded its a dud and the best thing i did was move that money into SCL and thank god has recouped most my losses there, too bad sold early though but overall portfolio still performing good.. if it wasn't for KMD the performance would've been through the roof

[smtrader]

Just saw a parcel of $100,000 in off-market transaction offloaded 10mins ago just before dividend payment so that tells me its time to leave the ship.

Disc. abandoned ship myself today - not holding

[huxley]

Just saw a parcel of $100,000 in off-market transaction offloaded 10mins ago just before dividend payment so that tells me its time to leave the ship.

Disc. abandoned ship myself today - not holding

Hmm... It goes ex on the 2nd of June. Did you actually sell out today?

[Kelvin]

Lucky I sold out at 174

Feel that their results depend too much on the easter/winter sales, and the warm weather means poor sales :(

[smtrader]

Hmm... It goes ex on the 2nd of June. Did you actually sell out today?

I sold out last parcel i had today.. i sold most of them just like Kelvin around $1.70.. Asb didnt allow me to let my shares go to market a few weeks ago, they took control of slowly selling them down because if i wouldve sold my whole lot i wouldve crashed the share price down to 1.20-1.30, i was quiet upset and contacted nzx and found that its really up to the broker to work the shares which sounds ridiculous to me, it sounds like market manipuation on the brokers end not allowing whoever wants to sell to just sell.. which is exactly what i think is happening with TWR now btw.

Yes it's before ex dividend, but if you look closely, soon as they announced dividends, the share price went up (due to some chasing dividends unaware of overall KMD position), i waited for share price to go up by the same amount of dividends to be paid (which was today) and sold so i can recycle money into better stocks ...

good luck if you're holding, i held long enough and lost believing in kmd, they might turn around maybe in the long term (but its a long shot) and the perception of negativity around it coupled with competition and retail outlook just makes me depressed so im moving along as i dont have the heart for it anymore.

[huxley]

I sold out last parcel i had today.. i sold most of them just like Kelvin around $1.70.. Asb didnt allow me to let my shares go to market a few weeks ago, they took control of slowly selling them down because if i wouldve sold my whole lot i wouldve crashed the share price down to 1.20-1.30, i was quiet upset and contacted nzx and found that its really up to the broker to work the shares which sounds ridiculous to me, it sounds like market manipuation on the brokers end not allowing whoever wants to sell to just sell.. which is exactly what i think is happening with TWR now btw.

Yes it's before ex dividend, but if you look closely, soon as they announced dividends, the share price went up (due to some chasing dividends unaware of overall KMD position), i waited for share price to go up by the same amount of dividends to be paid (which was today) and sold so i can recycle money into better stocks ...

good luck if you're holding, i held long enough and lost believing in kmd, they might turn around maybe in the long term (but its a long shot) and the perception of negativity around it coupled with competition and retail outlook just makes me depressed so im moving along as i dont have the heart for it anymore.

Thanks for your insights, I'm hanging in therefor now. Importantly I've not seen any paper loss (yet ! it's a small position). I think it could be turned around but take on board the high competition both in nz and Australia. I was in Japan not that long ago and visited a mall which pretty much was made up of outdoor clothing chains (north face etc). It looked a bit saturated to be honest!

[Ghost Monkey]

I'm beginning to feel that turning down Rod's offer last year was not such a good idea. Rod, come back..........

[drcjp]

I'm on the fence on this one. I think it has 50:50 chance of being good:not so good year. Started off well, so may continue. I think a lot of operators are playing on people's fear and getting decent parcels at good discounts. Of course it's all determined by your entry point, but then I suspect a number of Feb/March ATM buyers are feeling pretty nervous at the moment as well. And I also suspect Rod Duke is happy enough with Xavier.

[huxley]

Icebreaker emailed with a 20% winter promotion ... It begins...⛷☔️💵😎

[KiwiGekko]

Interest blog post: https://sixfootjournalism.wordpress.com/2016/05/27/kathmandu-destroys-stock-sends-to-landfill/ - would be interested to know if this is true and if so, how much stock gets destroyed.

[Ghost Monkey]

Hmmm, at first glance that does seem quite disappointing, certainly for their image if this article gets around. I would imagine those destroyed items were damaged and/or items on display which were no longer any good??
Still, doing it outside in daylight in view of others??? Maybe not so smart. Not when you're trying to sell yourself as sustainable and targeting zero waste!

[Baa_Baa]

Interest blog post: https://sixfootjournalism.wordpress.com/2016/05/27/kathmandu-destroys-stock-sends-to-landfill/ - would be interested to know if this is true and if so, how much stock gets destroyed.

Shocking! @KathmanduANZ shame shame shame.

[winner69]

^Paul doing a sterling job on @kathmandugear replying to tweets from punters expressing their disgust

[Baa_Baa]

^Paul doing a sterling job on @kathmandugear replying to tweets from punters expressing their disgust

Public relations nightmare ...

Kathmandu admits chucking stock in dumpster but says it was faulty http://www.stuff.co.nz/business/industries/80497280/kathmandu-admits-chucking-stock-in-dumpster-but-says-it-was-faulty "A spokeswoman for Kathmandu in Sydney, Helen McCombie, said the stock was "unsaleable due to a quality issue".

Of course it was faulty, the staff had just slashed it to pieces! OMG.

[Southern_Belle]

Public relations nightmare ...

Kathmandu admits chucking stock in dumpster but says it was faulty http://www.stuff.co.nz/business/industries/80497280/kathmandu-admits-chucking-stock-in-dumpster-but-says-it-was-faulty "A spokeswoman for Kathmandu in Sydney, Helen McCombie, said the stock was "unsaleable due to a quality issue".

Of course it was faulty, the staff had just slashed it to pieces! OMG.

bad news travels fast, ... more discussion fanning the flames

http://www.trademe.co.nz/Community/MessageBoard/Messages.aspx?id=1636276&topic=5

[winner69]

Probably common practice - 'sustainability' and such words are just a words in most corporates, nothing else. Gives the right impression but in Kathmandu's case obviously not part of the company culture if a 'senior' employee can do this sort of thing

They'll say (with all sincerity ha ha) this not normal practice - that store manager will be moved on - and all will be forgotten in a few weeks

[huxley]

Won't be doing the brand equity any favours but I suspect it's common practise industry wide..

Interesting to see the ranking on this list - https://www.baptistworldaid.org.au/assets/Be-Fair-Section/FashionReport.pdf

[winner69]

Won't be doing the brand equity any favours but I suspect it's common practise industry wide..

Interesting to see the ranking on this list - https://www.baptistworldaid.org.au/assets/Be-Fair-Section/FashionReport.pdf

That's a very interesting report. Thanks forthe link

A recent BCG article made the point that while 75% of senior executives in investment firms see a company’s sustainability performance as materially important to their investment decisions only 60% of managers in publicly traded companies believe that good sustainability practices influence investment decisions. A big disconnect

A quick look at that report you linked showed Kathmandu and many others are strong on policies/strategies (words onpaper) but not that good in following through. Did you see employee empowerment was marked pretty low - sort of suggesting that the words from thebtop may not have filtered down to the troops (although some would say that shop manager was empowered and showed initiative)

Bad publicity (sticks) and Kathmandu will just have to try harder.

[huxley]

It brings up wider issues in the clothing/fashion industry which are fleshed out in a recent documentary called "The true cost". Here the focus is on "fast fashion" but I read it as a potential issue for clothing manufactures (and other makers of consumer goods frankly) as consumer preferance favours more sustainable business practices and "fair" wages - similar to the shift to free range eggs & organic produce I guess.

(bit vague I suppose but Tegal has a free range brand and I see Lion has continued to extend its craft beer presence). At the end of the day it's just not a good look to be talking big about managing your environmental impact on the one hand and then to have reports staff slashing potentially unused products and dumping in dumpsters on the other… seems to give the old sustainability report a bit less legitimacy..

http://truecostmovie.com

http://www.imdb.com/title/tt0832903/

(sorry if this looks like spam! :D)

[smtrader]

Boy am i glad to have sold out of kmd

[drcjp]

Meh, storm in a teacup imho. Not a good look but the world will get over it, esp. when its a problem in the industry as a whole. Seems to be a lets bag dairy, retailers, landlords, etc etc. anyone in the media at the moment.

As for the real Kathmandu: http://www.everestuncensored.org/garbage-a-big-problem-of-kathmandu/

[couta1]

Meh, storm in a teacup imho. Not a good look but the world will get over it, esp. when its a problem in the industry as a whole. Seems to be a lets bag dairy, retailers, landlords, etc etc. anyone in the media at the moment.

As for the real Kathmandu: http://www.everestuncensored.org/garbage-a-big-problem-of-kathmandu/ Will all be forgotten in short order other than by a few who have nothing better to do with their time. Looks like a ripper of a winter heading our way with excellent early snow falls already(Who would have thought a few weeks ago) Sales for KMD will be good aye.

[drcjp]

Love a bit of minor biffo....
https://nzx.com/companies/KMD/announcements/283664

[winner69]

This time a year ago KMD share price was about $1.30

Briscoes made their very generous takeover offer

KMD shareholders rejected it as it was way way not enough

I see share price is $1.30 today

A lot can happen in a year eh

And the temperatures still pretty warm

[huxley]

This time a year ago KMD share price was about $1.30

Briscoes made their very generous takeover offer

KMD shareholders rejected it as it was way way not enough

I see share price is $1.30 today

A lot can happen in a year eh

And the temperatures still pretty warm


But the dividend yield looks a bit better today.... :D

[macduffy]

But the dividend yield looks a bit better today.... :D

Historically, yes. Future dividends have yet to be earned.

;)

[drcjp]

Someone's been taking metamucil today - transactions every 6-7 minutes numbering about 200 shares - nice and regular. Too regular.

http://stocknessmonster.com/stock-quote?S=KMD&E=NZSE

[huxley]

https://www.nzx.com/files/attachments/238589.pdf

[winner69]

https://www.nzx.com/files/attachments/238589.pdf

A profit UPGRADE as long as July is OK

Shares back to $1.80 pretty quick i reckon

Those selling recently must be gutted .....those taking a punt yippee

[Joshuatree]

"A substantial proportion of the year’s sales and earnings result are still dependent on trading in July, the finalmonth of the financial year. "

Not a holder but i'd be cautious here.With June being the warmest on record or in 1oo years(take your pick) unless July reverts to the norm they are going to be stuck with an oversupply of puffed up winter wear again. With Global warming in our frontal lobes now i wouldn't want to gamble with this; I'd rather be an investor.

[huxley]

A profit UPGRADE as long as July is OK

Shares back to $1.80 pretty quick i reckon

Those selling recently must be gutted .....those taking a punt yippee


aghh.. I was close to topping up at 130.. oh well

[drcjp]

[QUOTE=Joshuatree;626737]


"A substantial proportion of the year’s sales and earnings result are still dependent on trading in July, the finalmonth of the financial year. "

Not a holder but i'd be cautious here.With June being the warmest on record or in 1oo years(take your pick) unless July reverts to the norm they are going to be stuck with an oversupply of puffed up winter wear again. With Global warming in our frontal lobes now i wouldn't want to gamble with this; I'd rather be an investor.

[/QUOTED]
Disagree. Simonet has been pretty cautious in all his statements and they will have sales plans/running strategies in place considering autumn and current months have been not as cold. In other words, they're already making money from supposedly warmer climes. Anyway, anthropegenic global warming is a crock. We're probably heading for cooler times: http://www.nzherald.co.nz/world/news/article.cfm?c_id=2&objectid=11665744

[huxley]

"Anyway, anthropegenic global warming is a crock. We're probably heading for cooler times"

Agree right up to this statement..

[Joshuatree]

Yep right on cue Kathmandu winter sale has just hit my inbox.The sale that more and more people are realising isn't a sale but normal suggested retail prices(my opinion) except that its a kathmandu brand so no one will ever be able to prove it. still if it works all good but surely each time they have a sale more people opt out in a law of diminishing numbers? i bought a way better jacket (Puma) for less at Farmers at their 30% off sale but it was actually the recco retail price cause i looked on Puma Nz; still way cheaper than Kathmandu equiv sale price imo.

[Joshuatree]

"Anyway, anthropegenic global warming is a crock. We're probably heading for cooler times"

Agree right up to this statement..

Yes.Check the front page of todays Herald drcjp.

[huxley]

Yep right on cue Kathmandu winter sale has just hit my inbox.The sale that more and more people are realising isn't a sale but normal suggested retail prices(my opinion) except that its a kathmandu brand so no one will ever be able to prove it. still if it works all good but surely each time they have a sale more people opt out in a law of diminishing numbers? i bought a way better jacket (Puma) for less at Farmers at their 30% off sale but it was actually the recco retail price cause i looked on Puma Nz; still way cheaper than Kathmandu equiv sale price imo.


Just checked out a few websites for "running" jackets and I have to say theres not much in it really. I would argue that Puma is targeting the value segment of the market and they do seem to offer great price points (but not exclusively). I assume Kath would say they're largely positioning themselves with a more technical product design angle. Either way they seem to know what they're doing - whenever I'm at the weekend veg market on a cold morning its interesting to note the many Kathmandu, Macpac etc etc jackets that everyone seems to own.

http://store.nike.com/nz/en_gb/pw/mens-jackets-gilets/7puZobr?ipp=69
http://nz.puma.com/mens/clothing/jackets-outerwear.html
http://www.macpac.co.nz/mens/jackets-vests/softshell-windproof
http://www.adidas.co.nz/men-jackets
http://www.kathmandu.co.nz/mens/jackets/softshell-jackets.html

[Joshuatree]

Sure ihas been avery successful brand ; unquestionable; i do question how long they can keep it there and suggest the diminishing returns with age/time theme needs to be watched.A bit of copycat happening too re other stores starting to add more technical type labels polishing up polyester into all sorts of super fabrics etc.

[Sideshow Bob]

Just checked out a few websites for "running" jackets and I have to say theres not much in it really. I would argue that Puma is targeting the value segment of the market and they do seem to offer great price points (but not exclusively).

Given that they are selling through Farmers, it will be the value end. But not bad looking jackets/prices!

Personally I steer away from KMD. Normally just wait for a good special at T7.

[Joshuatree]

There is quality mixed in at Farmers now.My (not a running jacket) insulated jacket similar to Kathmandu Exmoor ("on Sale) for $250, mine with thinsulate etc re $130 or so, big difference. I dislike down as its bulky,useless when wet and needs careful dryng to get the loft back.And think about those ducks and geese; how many times do they get liveplucked in their lifetime:ohmy:.

[huxley]

[QUOTE And think about those ducks and geese; how many times do they get liveplucked in their lifetime:ohmy:.[/QUOTE]


Ha, once!

http://www.kathmandu.co.nz/articles/ethical-sourcing-of-down.html

[macduffy]

FN Arena reports that Macquaries have upgraded Kathmandu:

"Macquarie rates KMD as Upgrade to Outperform from Neutral (1) - Kathmandu has reported sales year to date are up 2.6%. FY17 earnings targets are upgraded, with a range of $49-53m now expected.
Macquarie had expected the late start to winter and warm Easter put the earnings risk to the downside. While the second half performance appears to have validated management's strategies the broker believes questions may arise about the sustainability of the turnaround.
Still, with the stock trading at a 20% discount to the previous bid price the broker upgrades to Outperform from Neutral. Target rises to $1.70 from $1.60.
Target price is $1.70 Current Price is $1.47 Difference: $0.235 If KMD meets the Macquarie target it will return approximately 16% (excluding dividends, fees and charges). Current consensus price target is $1.60, suggesting upside of 9.0%(ex-dividends)The company's fiscal year ends in July.
Forecast for FY16:
Macquarie forecasts a full year FY16 dividend of 8.25 cents and EPS of 15.50 cents .At the last closing share price the estimated dividend yield is 5.63%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.45. How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 14.3, implying annual growth of N/A.Current consensus DPS estimate is 8.4, implying a prospective dividend yield of 5.7%.Current consensus EPS estimate suggests the PER is 10.2.Forecast for FY17:
Macquarie forecasts a full year FY17 dividend of 10.09 cents and EPS of 16.23 cents .At the last closing share price the estimated dividend yield is 6.88%. At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 9.03. How do these forecasts compare to market consensus projections?
Current consensus EPS estimate is 16.2, implying annual growth of 13.3%.Current consensus DPS estimate is 10.2, implying a prospective dividend yield of 7.0%.Current consensus EPS estimate suggests the PER is 9.0.
This company reports in NZD. All estimates have been converted into AUD by FNArena at present FX values. Market Sentiment: 0.3 All consensus data are updated until yesterday. FNArena's consensus calculations require a minimum of three sources "

[Joshuatree]

[QUOTE And think about those ducks and geese; how many times do they get liveplucked in their lifetime:ohmy:.


Ha, once!

Thats great that Kathmandu make sure their source plucks from dead ducks/geese. hell who hasn't got a down duvet; makes one think though.

Weather has turned a bit colder too so good luck to holders.

http://www.kathmandu.co.nz/articles/ethical-sourcing-of-down.html[/QUOTE]

[Gizzajob I can do that]

Not sure the Goose sees this as the best option though! LOL

[winner69]

See Her Majesty couldn't resist the sudden surge in the KMD share price the other day and sold a million odd shares

Probably heard that no winter in NZ this year

[drcjp]

See Her Majesty couldn't resist the sudden surge in the KMD share price the other day and sold a million odd shares

Probably heard that no winter in NZ this year

Lots of commenters here mention the weather. You do realise KMD sell stuff in the summer/spring/autumn too? And they're making money despite all the concerns re our mild autumn winter so far. Go figure.

[macduffy]

Lots of commenters here mention the weather. You do realise KMD sell stuff in the summer/spring/autumn too? And they're making money despite all the concerns re our mild autumn winter so far. Go figure.

True. But apparel retailers need a decent winter to convince fashion-conscious consumers that last season's gear isn't up to another year's wear. A slow start to the winter means a slow take up of the new stuff and a lot will give it a miss entirely.

[Ghost Monkey]

Fall-winter season is more important for KMD's earnings than spring-summer, so they obviously need to have a good season. But Australia represents almost 65% of their sales so ..... how cold is it in Melbourne this year?

I do wonder though if we have reached peak puffer jacket coverage. Every second person in Auckland seems to own a Kathmandu or Macpac. I wonder if they've ridden that wave as far as it goes...........

[drcjp]

https://nzx.com/companies/BGR/announcements/285580
This could get interesting. Nothing like a bit of biffo to entertain.

[huxley]

Looks to be at a 12 month high..

[drcjp]

Rod Duke will be happy. its finally worth what he paid for it!

[winner69]

Rod Duke will be happy. its finally worth what he paid for it!

And Briscoes seem to be pushing on to all time highs

[emveha]

Mr Casey promised us a trading update "early august" so any time now... Including July sales. How was the weather in New Zealand in July?

[huxley]

Mr Casey promised us a trading update "early august" so any time now... Including July sales. How was the weather in New Zealand in July?

Last day for the winter sale is today. It's been a bit clolder lately for sure. Hopefully that'll translate into increased sales!

[emveha]

Here we go:

Full year FY2016 earnings will be in the following range:
• EBIT $50.0 to $51.0 million (last year $33.2m)
• NPAT $33.0 to $34.0 million (last year $20.4m)
Just narrowing the previous estimate (NPAT $32m to $35m), no up or down surprise.

[drcjp]

Here we go:

Full year FY2016 earnings will be in the following range:
• EBIT $50.0 to $51.0 million (last year $33.2m)
• NPAT $33.0 to $34.0 million (last year $20.4m)
Just narrowing the previous estimate (NPAT $32m to $35m), no up or down surprise.

I have a great deal of joyous schadenfruede on this result as the shorters who have been playing this stock over the last 6 months have been gazumped. So sad. HA!

[huxley]

What's this? KMD trading at $2.00

[winner69]

What's this? KMD trading at $2.00

Amazing eh

Next resistance level is $3 - remember that was only 18 months or so ago

After that $4 - was that just over 2 years ago

What's the phrase I am after?

[huxley]

Amazing eh

Next resistance level is $3 - remember that was only 18 months or so ago

After that $4 - was that just over 2 years ago

What's the phrase I am after?

https://m.youtube.com/watch?v=7tf1wzg4rdE

[winner69]

Just like a phoenix rising from the ashes (or from the depths of despair)

No reason to sell now

[drcjp]

Broker opinion on Yahoo has it at about $2.15. Getting in range now.

[huxley]

Amazing eh

Next resistance level is $3 - remember that was only 18 months or so ago

After that $4 - was that just over 2 years ago

What's the phrase I am after?


What do you guys think this year's final dividend will be? Must be more than 5c right?

[JayRiggs]

What do you guys think this year's final dividend will be? Must be more than 5c right?

Net profit will be close to 2012 levels of $34.9M where the final dividend was 7c, so my guess for this year is 7c.

[huxley]

Net profit will be close to 2012 levels of $34.9M where the final dividend was 7c, so my guess for this year is 7c.

Yeah that's what I was thinking.. So full year 10c

Cheers

[drcjp]

Very happy with this since mid-June - 50% gain.
Going to be interesting on 27th Sept with future plans

Agree with divvie around 7c

[huxley]

8c dividend.

[winner69]

NPAT of $33.5m a bit better than expected - Xavier will get his big (un)deserved bonus

At least heading in right direction again. Just as well Rod gave then a good kick up the behind last year.

No guidance given for F17 - not even a 'we expect increased profits over F16'

Wonder how long before they get back to NPAT of $42m achieved in F14 - got lots more stores now to help them along.

Huxley et all will like result - that's the main thing .....as long as the improvement continues through F17 .

[winner69]

8c dividend.

Wasn't it ridiculous when the share price fell to sub 130 not that many months ago.

[winner69]

Nice symetry on 5 and 10 year chart

Must mean something?

Hoop - can you help

[huxley]

Wasn't it ridiculous when the share price fell to sub 130 not that many months ago.

Indeed! I only regret not pulling the trigger and topping up. Will be interesting to hear plans for FY 17 and behond.

[winner69]

Indeed! I only regret not pulling the trigger and topping up. Will be interesting to hear plans for FY 17 and behond.

Those plans include seeking alliances with European / North American retailers.

There was a good article in The Australian about the years result (not that brilliant) and I liked this bit -

That’s the spirit of adventure for you: blazing new trails and scaling new peaks. The trouble is, Kathmandu’s sales (and share price) tend to stumble at high altitude and Briscoe won’t be a benevolent Sherpa if it comes to the rescue.

[huxley]

Those plans include seeking alliances with European / North American retailers.

There was a good article in The Australian about the years result (not that brilliant) and I liked this bit -

That’s the spirit of adventure for you: blazing new trails and scaling new peaks. The trouble is, Kathmandu’s sales (and share price) tend to stumble at high altitude and Briscoe won’t be a benevolent Sherpa if it comes to the rescue.



Ha that's a brilliant description

[winner69]

Shareholders rejected equivalent of $1.80 kindly offered last year - guided by some pie in the sky valuations $2.10 to $2.41 (add say 10% to get current valuation)

Current KMD share price just over $2.00 seems OK

But BGR shares much higher now - that $1.80 would be $2.40 now (all other things being the same)

So Xavier still has a lot of work to do to justify KMD Board telling you to reject Rod

[drcjp]

Shareholders rejected equivalent of $1.80 kindly offered last year - guided by some pie in the sky valuations $2.20 to $2.40 (add say 10% to get current valuation)

Current KMD share price just over $2.00 seems OK

But BGR shares much higher now - that $1.80 would be $2.40 now (all other things being the same)

So Xavier still has a lot of work to do to justify KMD Board telling you to reject Rod

Last time I looked analysts had KMD at about NZ$2.10. Will be interesting to see what they have it at in the next week or so.
I think Xavier's done pretty good. What will be important now is whether he and Ben Ryan, who both have decent oversea's experience, can finally turn KMD into a truly international company. To be fair, Rod Duke has no experience at that - he is a big fish in a very small pond and his first attempt to go ex-NZ failed.

I agree with the line of thought that Duke won't stay for long as a SSH. He can't afford to buy them outright now, he's already got $1.2M in divvie coming and he'll probably downsell after Nov 14th, provided KMD stays above $2 (which I think it will).

[winner69]

So KMD had a good year and improved profits by $13m to $33m....but still have some way to go to get back to $40m which must be a number in some analysts working

I had a look at where the $13m came from (ir changes in key items from F15 to F16) which is shown
below

Reasonable revenue growth and a bit of margin expansion was good and lead to $14.4m increased margin.

Rents were up $5.3m (probably a necessity to survive) and they reduced other costs by $8.5m

So a fair chunk of the improved NPAT came from cutting expenses (forced) - as they say 'they saved their way to prosperity', not always a sustainable strategy

Looking forward and $40m profit one would have to think that they have squeezed what they can out expenses and to some degree margins - so the future looks like it depends on top line sales growth without stuffing other things up.

Will be interesting to see what happens

Market not impressed so far with the result

[winner69]

One other thing that fell out of the numbers I was playing around with was that in spite of the good vibes etc NZ sales in H2 were about the same as the year before

It was Australia that saved the day for KMD this year

Not often do we appreciate Aussies saving our bacon

Pity NZers were reluctant to buy more this year

[huxley]

Interesting q&a with Maurizio Viani

[macduffy]

From Investsmart:

https://www.investsmart.com.au/investment-news/has-kathmandu-conquered-its-mountain-of-problems/138249?utm_source=isgroup&utm_medium=email&utm_campaign=free-weekend-230916

[huxley]

http://theregister.co.nz/features/experiences-over-stuff-new-consumerism-and-what-retailers-can-do-about-it

Interesting article highlighting a trend for consumers to favour experiences over stuff..

I guess this is an opportunity for Kathmandu etc al

[winner69]

Transcript of investor call

https://www.nzx.com/files/attachments/244400.pdf

Reading between the lines I get impression that analysts didn't get the answers they were after - or positive vibes to the issues they were probing

Read like profit growth (if any) is not coming from global stuff or outlet expansion in ANZ but from still fixing things up ......hmm

[IAK]

Macpac growth outstripping Kathmandu. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=117

I must say I do like Kathmandu travel clothes and accessories - good stuff.

[winner69]

Macpac growth outstripping Kathmandu. http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=117

I must say I do like Kathmandu travel clothes and accessories - good stuff.

And Kathmandu would be drooling over these numbers that WHS put up re Torpedo7 -


Sales of $149m was +13% on FY15 performance and was underpinned by strong sales growth in both Torpedo7 and 1-day.co.nz.

Torpedo7 Stores delivered significant growth of +25% on FY15. The growing success of the Torpedo7 House Brand range a major contributor to this result

[IAK]

And Kathmandu would be drooling over these numbers that WHS put up re Torpedo7 -

Sales of $149m was +13% on FY15 performance and was underpinned by strong sales growth in both Torpedo7 and 1-day.co.nz.

Torpedo7 Stores delivered significant growth of +25% on FY15. The growing success of the Torpedo7 House Brand range a major contributor to this result


Like Torpedo 7 too, buy all my mountain biking gear through them.

[winner69]

Transcript of investor call

https://www.nzx.com/files/attachments/244400.pdf

Reading between the lines I get impression that analysts didn't get the answers they were after - or positive vibes to the issues they were probing

Read like profit growth (if any) is not coming from global stuff or outlet expansion in ANZ but from still fixing things up ......hmm

One of the issues probed by analysts was KMD's stock levels

Their stock management is still pretty abysmal

Stock turns a pretty low 1.5 times a year isn't very efficient. Jeez even pumpkin patch do a lot better than that, even with their sales declining at a fast rate.

Xavier really needs to get his 'product newness' and 'Just Enough' working better - else analysts won't be too impressed (ie no upgrades)

[winner69]

Just out a few paragraphs of Xavier's comments through the old buzzsaw

He does very well on that front - one of the highest use of buzzwords i have come across

Some research has concluded that high use of buzzwords by a company the greater the chance of underperformance

Put the same paragrahs through a readibility checker - interesting result (for a public announcement):

Your score is 18.4

That's really hard going. Your grade is about 12, which is at the same reading level as the Harvard Law Review. Chances are, you could do a few things to simplify it.

[huxley]

One of the issues probed by analysts was KMD's stock levels

Their stock management is still pretty abysmal

Stock turns a pretty low 1.5 times a year isn't very efficient. Jeez even pumpkin patch do a lot better than that, even with their sales declining at a fast rate.

Xavier really needs to get his 'product newness' and 'Just Enough' working better - else analysts won't be too impressed (ie no upgrades)

Fair enough although do you know what stock is taking longer to shift? A lot of KMD's inventory is "equipment" would you expect $500 tents etc to have the same turn around as the more fashion based retailers you compare with?

Granted it's an issue for them though..

[winner69]

Good read
https://www.nzx.com/files/attachments/245855.pdf

Support eliminating conventional cotton from their products.

Cotton hopelessly environmentally wasteful

[JayRiggs]

AGM about to start at 11am. Expecting a trading update too, as they have provided one around AGM time the past 3 years.

[winner69]

AGM about to start at 11am. Expecting a trading update too, as they have provided one around AGM time the past 3 years.

Not very inspiring announcement

https://www.nzx.com/companies/KMD/announcements/292921

Almost verges on a profit downgrade in disguise

[TheHunter]

Not very inspiring announcement

https://www.nzx.com/companies/KMD/announcements/292921

Almost verges on a profit downgrade in disguise

Yes and no - while sales are slightly down (due to FX which is uncontrollable, sales are up excl. fx changes) operational expenditure should also be down (promotional activity, less stores in UK). Key question is impact of FX on COGS. Still plenty of value at current prices IMO, especially if 1h profit is maintained. FX is key concern in the short term, shouldn't sway long term value.

[huxley]

Share price support has evaporated since going ex dividend but with so much resting on the Xmas& winter sales the performance is not too surprising. Kinda disappointed they're still just repeating past statements regarding the international opportunity.. I mean these are literally the same bullet points from old presentations.. would be interesting to hear from anyone present? Would actually be handy if KMD posted a video link on their website.

[winner69]

The Target Co Statement re briscoes takeover had revenue forecasts out to FY16. They didn't achieve the sales growth laid out in that forecast

If they had made a guess for FY17 i'm sure the 'promise' would have been for continued grow - hey don't take Briscoes up on their offer.

No sales growth for the first 15 weeks of the year is a bit of a worry in my view.

And the H1 profit forecast not that good either

[winner69]

4traders has 4.5% revenue growth in F17 - year not off to good start in light of this

Hope seems the story again

[JayRiggs]

Kathmandu has been a frequent ram raid target this year.
Kathmandu products in very high demand.... for the ram raiders.

http://www.stuff.co.nz/national/crime/85731301/christchurch-kathmandu-store-ramraided

http://www.nzherald.co.nz/bay-of-plenty-times/news/article.cfm?c_id=1503343&objectid=11631977

http://www.stuff.co.nz/national/crime/81047448/Kathmandu-raided-twice-during-week-of-smash-and-grabs-in-east-Auckland

http://www.stuff.co.nz/waikato-times/news/70847178/two-arrested-after-kathmandu-ram-raid-in-pukekohe

[huxley]

Decided to exit this afternoon. Recived a couple of dividends and capital gain since buying in the low $1.50's

Good luck to all holders

[winner69]

Not exactly setting world on fire
https://www.nzx.com/files/attachments/252483.pdf

Looks like implied promises made in defence of Briscoes offer were a bit far fetched

[percy]

Not exactly setting world on fire
https://www.nzx.com/files/attachments/252483.pdf

Looks like promises made in defence of Briscoes offer were a bit far fetched

No surprises there.!

[winner69]

So so H1 fir KMD - but that's better than the usual disaster our ones anyway

https://www.nzx.com/files/attachments/255141.pdf

The believerscwillthink pretty solid result

Rod (and others) will be thinking heck they not delivering on that bull**** they told everybody a year or so ago.

Rod did say he was watching closely

That Xavier pretty good with nice presentations - a bit like Nick from WHS

[Xerof]

Kathmandidnt and kathmandont

[winner69]

Kathmandidnt and kathmandont

Punters would have been better off if they had taken Rod's offer - by quite a lot ......wouldn't they?

[couta1]

Punters would have been better off if they had taken Rod's offer - by quite a lot ......wouldn't they? Not really, I sold for a loss at $1.90, Rod's offer was $1.80, plus I collected another divvy after that offer. Rod needs to offer $2-$2.15 to get any real traction IMO.

[Hawkeye]

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11822184

Media seems to like it

[macduffy]

Not really, I sold for a loss at $1.90, Rod's offer was $1.80, plus I collected another divvy after that offer. Rod needs to offer $2-$2.15 to get any real traction IMO.

But winner has a point in that by accepting the offer, KMD shareholders would have harnessed themselves to a proven winner in BGR and its management.

[couta1]

But winner has a point in that by accepting the offer, KMD shareholders would have harnessed themselves to a proven winner in BGR and its management. If you like retail stocks, I'm not interested in holding any retail going forward.

[winner69]

But winner has a point in that by accepting the offer, KMD shareholders would have harnessed themselves to a proven winner in BGR and its management.


That $1.80 would be $2.70 now (all things being equal)

Kathmandu have not delivered on what they said they would do to deserve the $2.30 or whatever they thought it worth at the time.

But Xavier owing OK with his bonuses

[huxley]

Looks like they struggled with a high USD. Sales over all pretty flat and they've stalled on their 180 store target. Might be a mature business in Australia these days. I notice the international initiatives don't commence till fy18.

[SCOTTY]

Maybe Rod is more interested in Ezibuy?

[percy]

Maybe Rod is more interested in Ezibuy?

Be a lot Ezier buy.!

[SCOTTY]

Be a lot Ezier buy.!

Very funny Percy :)

[winner69]

This retail expert thinks Kathmandu disappointing NZ

http://www.stuff.co.nz/business/90685255/kathmandu-delivers-10m-profit--but-where-was-nz

[winner69]

Kathmandu need to do a better job of proof reading their financial statements

[Ghost Monkey]

What do you think Winner, plenty of rain going about, consumers loading up on Rain Jackets early this year?

[macduffy]

What do you think Winner, plenty of rain going about, consumers loading up on Rain Jackets early this year?

I don't know about that but the rain has prompted me to resurrect an old "London Fog" jacket that I bought in Vancouver about 20 years ago and subsequently "retired" as being unfashionable. Suddenly, it's back in fashion! Or maybe, that's not important at my age!

[Ghost Monkey]

"Another concern for locals and experienced trampers alike was the number of unprepared tourists hitting the track, which can quickly become dangerous in unpredictable weather conditions.
The Herald witnessed trampers on the crossing in sandshoes and skinny jeans with scarves wrapped around their heads because they'd forgotten a hat and sunglasses.
Other more extreme examples of unprepared tourists included a group who had to be rescued from the track after walking it barefoot, channelling Frodo's barefoot journey through Mordor in The Lord of The Rings, or those tackling the crossing in jandals and wearing rubbish bags as ponchos."


This from the Herald on the hordes of tourists descending on the Tongariro Crossing.

Sounds like Kathmandu and/or Macpac should open up a shop at the start of the track! A 1000 hikers a day! Think of all the boots, hats and jackets they could sell!

[winner69]

Hey Huxley - see the HLG thread for comments

Have KMD given any profit guidance for F17? did say sales going OK in May, that's all I can see

Spose an update early August

At least weather going or them this year ...should help

[huxley]

Hey Huxley - see the HLG thread for comments

Have KMD given any profit guidance for F17? did say sales going OK in May, that's all I can see

Spose an update early August

At least weather going or them this year ...should help

They're the GNE of retail!
When the spot price is high everyone wants to buy their products..

While I like the company, I no longer hold.. I only had 8.5k shares in KMD and sold out a few of month ago and transferred the funds to IFT when they were "cheap" at the beginning of the year.

Primary reason was a wish to get out of retail stocks but I still think they'll do well. Sorry I haven't kept up regarding the guidance, but you know.. it'll all come down to a successful winter sale.. as usual.

Good luck to any holders ;)

[Hawkeye]

Seems to have climbed steadily since you got out of it Huxley..... what shares are you thinking of selling off next? Might have to get some :P

Anyone know why they are climbing right now?
Ta
mum & dad investor

[huxley]

Seems to have climbed steadily since you got out of it Huxley..... what shares are you thinking of selling off next? Might have to get some :P

Anyone know why they are climbing right now?
Ta
mum & dad investor


Haha, Yeah it looks like I could've hung in there a bit longer, but I'm pretty content with IFT's performance since buying in. :sleep::sleep:

[silverblizzard888]

Seems to have climbed steadily since you got out of it Huxley..... what shares are you thinking of selling off next? Might have to get some :P

Anyone know why they are climbing right now?
Ta
mum & dad investor

They have steadily improved the business since their big under-performance a few years ago, so why shouldn't their share price be increasing. If anything I'm surprised the shares haven't been trending upwards earlier since they have being showing they are making most parts of the business quite efficient.

[Hawkeye]

They have steadily improved the business since their big under-performance a few years ago, so why shouldn't their share price be increasing. If anything I'm surprised the shares haven't been trending upwards earlier since they have being showing they are making most parts of the business quite efficient.

Do you think briscoes will make another offer? or just ride the wave with their decent sized holding?

Huxley - IFT seem like a good share these days, but with domestic airlines dropping the amount of flights to WLG, and AKL getting another runway it could be in for some challenges with WLG airport. Still, plenty of cash in hand to make some good investments. I meant to pop into their investor meeting here a few weeks back but neglected to write down the time and missed it. I had their shares for several years and sold them approx two years ago.

[silverblizzard888]

Do you think briscoes will make another offer? or just ride the wave with their decent sized holding?

I'd say Briscoes will probably just ride the wave, they tried to make a low ball offer earlier on when there was a chance shareholders may have accepted the offer, though now that KMD are in a much better condition it'd be even harder to put in a offer that would not insult current shareholders. Rod Duke is a prudent man and would only do something if there was a large margin of safety, trying to acquire KMD would require a premium and negate any margin of safety they could be acquired at. They have already made a considerable profit with their current holding, though they are probably more likely to sell once KMD are fully valued in the market than put in a offer for a full takeover at this moment.

[TheHunter]

https://www.nzx.com/companies/KMD/announcements/304968.

Great result, tracking towards the ~$60m EBIT range again - last time this range was reached the share price hit the high $3 range, pushing $4 at times.

Earnings growth for the foreseeable future driven by sales growth and a favorable USD/NZD rate making those COGS cheaper. Did I mention the great dividend yield...?

Keep it up Xavier :t_up:

[winner69]

Mountain Designs finding Kathmandu too good for them in Australia ....just maybe

https://www.smartcompany.com.au/industries/retail/mountain-designs-close-stores-increased-competition/

[winner69]

WOW — first half profits up by more than 20% on last year

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KMD/313373/273437.pdf

Bit of a worry that NZ same store sales down 6.4% though — but profit from higher margins is what matters

[winner69]

They say profit will be ‘not less than $12m’

I reckon ‘will be more than $12m’ sounds a lot better

But then they already know it’s $12.1m and ‘will be about $12m’ isn’t that positive eh

[minimoke]

Bit of a worry that NZ same store sales down 6.4% though — but profit from higher margins is what matters
That wil be all the new migrants not knowing to wait for the next sale.

[winner69]

Rod still interested

Would have been better off accepting his ofer last time ....but no doubt Kathmandu shareholders have even more elevated elevated (unrealistic) this time around ....might turn Rod off though

https://www.stuff.co.nz/business/102191177/br8iscoe-group-still-wants-to-buy-kathmandu

[JoeGrogan]

Rod still interested

Would have been better off accepting his ofer last time ....but no doubt Kathmandu shareholders have even more elevated elevated (unrealistic) this time around ....might turn Rod off though

https://www.stuff.co.nz/business/102191177/br8iscoe-group-still-wants-to-buy-kathmandu

Interesting... but don't see it happening to be honest.

[winner69]

Good on Kathmandu forking out $100m odd on buying an US shoe company ...OBOZ

Chance for you guys to get some more cheap shares in the SPP

https://quoteapi.com/resources/da9866271f9d0071/announcements/kmd.nzx/315751/KMD_Investor_presentation_Oboz_acquisition_and_pla cement_offer.pdf?bearer=eyJhbGciOiJIUzI1NiIsInR5cC I6IkpXVCJ9.eyJzY29wZSI6WyJndWVzdHMiLCJ1c2VycyJdLCJ uYmYiOjE1MjE1MDE1MDMsInN1YiI6Nzg5Njk1LCJpc3MiOiJzd G9ja25lc3MiLCJub25jZSI6Ijk0YTRhYWYwOTE0ZGMzOWMiLCJ pYXQiOjE1MjE1MDE1MDMsImV4cCI6MTUyMTUwMjQwM30.VqeXF ArGXDGkH0PMKlF1cgDjbhD0yWvtmcMRPXOko0Y

[percy]

Good on Kathmandu forking out $100m odd on buying an US shoe company ...OBOZ

Chance for you guys to get some more cheap shares in the SPP

https://quoteapi.com/resources/da9866271f9d0071/announcements/kmd.nzx/315751/KMD_Investor_presentation_Oboz_acquisition_and_pla cement_offer.pdf?bearer=eyJhbGciOiJIUzI1NiIsInR5cC I6IkpXVCJ9.eyJzY29wZSI6WyJndWVzdHMiLCJ1c2VycyJdLCJ uYmYiOjE1MjE1MDE1MDMsInN1YiI6Nzg5Njk1LCJpc3MiOiJzd G9ja25lc3MiLCJub25jZSI6Ijk0YTRhYWYwOTE0ZGMzOWMiLCJ pYXQiOjE1MjE1MDE1MDMsImV4cCI6MTUyMTUwMjQwM30.VqeXF ArGXDGkH0PMKlF1cgDjbhD0yWvtmcMRPXOko0Y

Sheer madness.
Shoes have ruined many an investor.

[winner69]

Sheer madness.
Shoes have ruined many an investor.

Michael Hill was classic eh

[winner69]

Sheer madness.
Shoes have ruined many an investor.

Acquisition not cheap as either ....but big is beautiful .....as is global expansion

[percy]

Michael Hill was classic eh

Russell Goward's Westmex was even more fun.! About a 100 shoe shops [or more] in the UK.

ChCh was the home to about four or five shoe manufacturers in the early 1960s including Duckworth Turner and M O'Brien.
In fact M O'Brien was about my first mistake on the sharemarket in 1967/68.!
"Gilmore" used to write excellent business articles in "The Bulletin",and ran a spec portfolio for readers.Often he wrote about his misfortunes of running a shoe business.
Lately Hellaby Holdings ran a very successful investment company,except for their exposure to shoes, through Hannahs and No.1 shoes.
As for a clothing retailer going into manufacture of footwear,I see it will end badly for shareholders.

[winner69]

Russell Goward's Westmex was even more fun.! About a 100 shoe shops [or more] in the UK.

ChCh was the home to about four or five shoe manufacturers in the early 1960s including Duckworth Turner and M O'Brien.
In fact M O'Brien was about my first mistake on the sharemarket in 1967/68.!
"Gilmore" used to write excellent business articles in "The Bulletin",and ran a spec portfolio for readers.Often he wrote about his misfortunes of running a shoe business.
Lately Hellaby Holdings ran a very successful investment company,except for their exposure to shoes, through Hannahs and No.1 shoes.
As for a clothing retailer going into manufacture of footwear,I see it will end badly for shareholders.

OBOZ are designers and distributors who outsource manufacturering. I was a bit surprised to see in KMD presentation that OZBO don’t have contracts with the manufacturers they use. Listed as a potential risk.

[winner69]

Also 45% of OBOZ sales are to one customer ...with no contract in place either.

[percy]

OBOZ are designers and distributors who outsource manufacturering. I was a bit surprised to see in KMD presentation that OZBO don’t have contracts with the manufacturers they use. Listed as a potential risk.

Chinese or Bangladesh manufacturers then?

[percy]

Also 45% of OBOZ sales are to one customer ...with no contract in place either.

The excitement builds.?

Wonder what Rod Duke makes of it.?

[winner69]

Chinese or Bangladesh manufacturers then?

Very ethical company so maybe not the case

They plant one tree for every pair of shoes sold ...cool

[percy]

Very ethical company so maybe not the case

They plant one tree for every pair of shoes sold ...cool

Most probably Oboz would be a better fit with Hiut Jeans,?

[winner69]

Most probably Oboz would be a better fit with Hiut Jeans,?

I’ll tell Xavier about Hiut ....next takeover target for him eh

[winner69]

We critiqued this takeover well percy haven't we

Surprised the many Kathmandu shareholders on this site haven't come out and told us how good it is

[winner69]

The excitement builds.?

Wonder what Rod Duke makes of it.?

Doubt Rod that impressed ...he likes selling things and not making things

Doubt he'll be rushing out to stock oboz in Rebel

[winner69]

percy ....these boots your scene?

[macduffy]

We critiqued this takeover well percy haven't we

Surprised the many Kathmandu shareholders on this site haven't come out and told us how good it is

Only a Kat shareholder via my interest in Briscoes but, like percy and others I'm not excited about the prospect. Sounds like moving away from the knitting for the sake of size and "international expansion"?

[minimoke]

Oboz get 4+ stars for customer satisfaction on Amazon (US$173 for the pair above)

[percy]

percy ....these boots your scene?

No me,but they look as though they would do the business.

[jg8512]

interesting to see the concerns over the OBOZ acquisition, with not a lot of positive enthusiasm for it. I'll rise to the bait and outline a more bullish case ...

first, good result from KMD core business. the improvement in inventory, margins, and the recent sales growth since the period-end all very impressive (big sales periods yet to come of course). so well done KMD.

re: OBOZ. Yes, I agree, it's a stretch and outside their core competency as a NZ/Aust centric, apparel active-wear retailer. So a few red flags. BUT there is a bullish scenario. First, they know OBOZ well. They've been retailing their stuff for 10 yrs and were OBOZ's second customer, IIUC. They're not looking to integrate OBOZ and the head of OBOZ stays on to run OBOZ (query for how long of course). Second, there seems good alignment in terms of corporate and brand values & positioning. OBOZ seems established with well-regarded products. Third, shoes aren't necessarily a horror business. Yes, I recall MHJ shoes; but Berkshire Hathaway owns a couple of footwear businesses and they're well performed. Ie, H Brown & Brooks. Some of the Australian apparel/footwear chains have performed eg I had a terrific run with Colorado some years back. Fourth, valuation seems ok. 10x EBITDA for a business that is capital light, with a track record of good growth - from the limited financial details I've seen, it's not obviously an overpay (yes, some risks from the lack of contracts, but I guess if they have well-established relationships, that's valuable too. Plus, how long would the manufacturing/distribution contracts be for anyway. One -two seasons?) Fifth, KMD might be able to leverage the OBOZ relationships to sell more of its other product into the US market. Some potentially large revenue synergies there (albeit that may not ever eventuate).

I agree this changes the risk profile of KMD and stretches mgmt further. They are also paying more for OBOZ in terms of valuation multiples than the multiple which KMD trades on - so a risk the market won't pay up for the acquisition. On the other hand it does offer some growth options.

The big question: would I have done it if I run KMD? The acquisition is not compelling enough in my view, so probably not. But I'm a risk-averse type of investor ...

PS. I'm also a BGP shareholder (much larger stake) ... with hindsight perhaps Rod should have paid up when BGP had the chance. I can't believe he would support the OBOZ acquisition, but at 20% ownership he doesn't get much more say in matters than you or I do.

Ultimately, the question is: how much confidence do we have in KMD board and mgmt to manage this well and deliver on the bullish scenario? hhhmm. Simonet has done well, IMHO, but the chair I worry about it. Esp. the lack of retail and international experience, his track record doesn't convince me. OK, ok, I tried to be bullish ...

[macduffy]

You make a good case for the defence, jg, and the bullish scenario may well play out to be correct. A positive is that BGP supports the capital raising so I guess that means that Rod D is on side!

[Ghost Monkey]

New Zealand companies have an absolutely outstanding record of buying overseas investments for too much and at the wrong time. Don't worry, Xavier's gonna show them how its done.

[dragonz]

as at 14:27:21, Wednesday 21 March, 2018 (NZDT)
Briscoe Group supports Kathmandu capital raising

BGP
21/03/2018 14:27
GENERAL
NOT PRICE SENSITIVE
REL: 1427 HRS Briscoe Group Limited

GENERAL: BGP: Briscoe Group supports Kathmandu capital raising

Briscoe Group Limited (NZX /ASX code: BGP) today confirms it has participated
in the capital raising announced by Kathmandu Holdings Limited (KMD)
receiving confirmation of an allocation of 2,570,925 KMD shares from the
institutional placement for a cost of $5,553,198. It also intends to
participate in the Share Purchase Plan.

Rod Duke, Group Managing Director said, "We are very supportive of
Kathmandu's initiative to diversify the business and position it for greater
international growth."

For and on behalf of the Board of Directors

21 March 2018
Rod Duke
Group Managing Director

Briscoe Group Limited is a company incorporated in New Zealand and registered
in Australia as a foreign company under the name Briscoe Group Australasia
Limited (ARBN 619 060 552). It is listed on the NZX Main Board and also the
Australian Securities Exchange as a foreign exempt entity. (NZX/ASX code:
BGP).
End CA:00315840 For:BGP Type:GENERAL Time:2018-03-21 14:27:21

[jg8512]

really intrigued that BGP, and Rod D personally, supports the OBOZ acquisition. He floated BGP and raised a lot of cash many years ago. At the time they talked of potential acquisitions. but BGP/Duke have never completed any acquisitions - except perhaps Living & Giving which was small, and the 20% stake in KMD. This was despite getting close on a few, I recall Baby Factory for example, and the ASX compliance listing for BGP (which always looked like an enabler for an acquisition. I thought ADH).

Why then does he support the OBOZ acquisition. Duke's stated rationale for why it makes sense could equally apply to BGP. Ie, BGP could also "diversify and position for international growth" through an offshore acquisition, but they've never done it. And apparently, don't want to (for reasons we all could understand). Yet he supports the KMD initiative. I don't understand the logic. Is it being consistently applied?

[macduffy]

Perhaps it's a way to get growth and (overseas) diversification without risking the main asset - BGP - too much?

[percy]

Perhaps it's a way to get growth and (overseas) diversification without risking the main asset - BGP - too much?

It will be fantastic for 2 to 4 years.Can't open enough stores in USA to keep up with demand.Canada next,then Brazil.
Then Xavier will resign for family reasons,just before it turns to custard.
Shoes sold off at a great loss.Capital raise to pay off bank debt.
Shareholders are saved as Rod makes a very reasonable takeover offer.[Reasonable for Rod}.

[LAC]

“Reasonable for Rod” lol

[silverblizzard888]

This acquisition probably isn't a splash in the water kind of move that investors like, but its a well calculated move to grow without putting too much pressure on the pace of store openings to bring all the growth.

For those that think Rod isn't entirely with this plan I'd say you're wrong. This is totally a Rod type move. By acquiring Oboz and as they have mentioned in the statement, they want to head into the wholesale market. Taking the wholesale market approach to expand into North America is totally the Rod approach, its very conservative and calculated. Its a way for KMD to sell more product without opening any stores, which lowers the downside by a lot if they don't do well there. I think they have learnt their lesson from the UK where opening stores wasn't a immediate hit. Its a bit different for Rod at Briscoes since he couldn't take the same approach cause it doesn't manufacture its own branded products, but Kmd do and this is a very similar strategy that Rod wanted to do when he wanted to acquire Kmd a couple years ago.

Its too easy to think KMD can do it all, considering their success in NZ and AUS its a easy mistake to think the same model works elsewhere. At the end of the day KMD is a manufacturer of their own goods who just happens to sell their own goods in their own stores too. The Oboz acquisition opens up channels and networks that will help them sell their product in overseas in the wholesale approach. If you looked at Adidas and Nike they used the wholesale approach for a very long time in a lot of countries and when their products grew too influential and sales amounted to the point where it seemed ridiculous not to open their own stores thats when they did. I think its a good approach.

The value of the deal is average on present financials, they are paying over $100 million NZ for about $5 million net profit for Oboz for the upcoming financial year, but the net profits are growing over 80% and revenues 36%, which probably if consistent then perhaps they will deliver 9 million net profit next financial year and from then on the profits will justify the price tag and bring a lot of future benefits for Kmd. On financial terms its average value, but for future profits and connections it brings then its not too bad. Long term holders its a pretty good thing, short term holders I don't think theres much for you.

[winner69]

Silverblizzard - good post but I reckon Rod’s/Briscoes main motive in ‘supporting’ the deal was not to dilute their current holding.

Good they going to participate in the SPP as well ...... all $15,000 worth. Cool!

[Schrodinger]

What is their point of difference in the USA the home of retail? Not keen on their push unless its real low key.

At the moment I cant see what niche they will fill.

[winner69]

What is their point of difference in the USA the home of retail? Not keen on their push unless its real low key.

At the moment I cant see what niche they will fill.

Think Appalachian Trail

[Balance]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MHJ/316661/277569.pdf

Michael Hill closing down its US operations.

Pumpkin Patch had its US backside kicked all the way to receivership.

And we have KMD thinking it can make the States work?

[Gisborne Grumbler]

Different approach to the market - both PP and Michael Hill rolled out stores.

[Ghost Monkey]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/MHJ/316661/277569.pdf

Michael Hill closing down its US operations.

Pumpkin Patch had its US backside kicked all the way to receivership.

And we have KMD thinking it can make the States work?


As the Grumbler wrote, different approach. KMD already sell via TradeMe and Amazon.Au here and in OZ. I expect them to take a similar approach, using Oboz distribution channels to stock in third party stores and to sell on Amazon. The other side to that though is I doubt KMD make many sales from such online channels and US already has plenty of outdoor clothing brands. Can they leverage Oboz brand to gain a foot in the door? Hmmmm...

[winner69]

This is pretty good news

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KMD/319870/281641.pdf

Had my doubts about Xavier early on but recent performance probably more than just luck eh.

Momentum still building ....expect more good news over the years I reckon.

[JayRiggs]

Yes pretty happy with trading update today.
A bit of upside when Oboz in the US starts contributing to sales.

Glad to have held these through the bad times of 2014/2015. Kicking myself for not buying down at the lows of $1.30 during Brexit in 2016!!!

[macduffy]

And good news for shareholder Briscoes too!

Disc: I hold BGR.

[JayRiggs]

Full year FY2018 earnings (after $2.0m Obōz acquisition transaction costs) are currently expected to be in the following range:
• EBIT $72 to $77 million (last year $57m)
• NPAT $48 to $52 million (last year $38m)

Taking midpoint NPAT forecast of $50 million, that'll be a new record, beating FY2013 NPAT of $44.2 million.
Should be back over $3 soon!

I'm thinking FY18 dividend will be bumped up to 10c.

[Sideshow Bob]

Looks like a good result.....sales, profit up.

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/KMD/324010/286923.pdf

[Patient Panda]

Wow what a result!!

Makes Mr. Dukes investment in KMD look like an absolute steal.

[Ekrub]

OK, I'll say it......good on ya Aussie, reversing the share price slide, for the moment at least. http://www.thebull.com.au/articles/a/78542-kathmandu-shares-jump-17-on-strong-sales.html

[Yoda]

So growth totally due to Auzzies and a bit from the US . can we trust the Auzzies to continue this growth..? Who are the Others..as there is already a column for rest of the world ... Maybe Dagobah?

[Beagle]

Yeah, this one got beaten with the ugly stick pretty hard in late 2018 along with most of the rest of the market but objectively you'd have to say the commentary out of the company has been in marked contrast to that forthcoming from HLG. Same store sales growth really impressed in Q1 at a time when petrol was at record high's so demand seems to be very sticky and growing.
Company is clearly expecting strong profit growth this year and is on historical metrics of PE 11.5 and gross yield 7.6%.
I'm not big on retail in a bearish market but have taken a small stake in this one which appears to have genuine momentum at a time when other retailers may be starting to struggle a bit.

I suspect wealthy baby boomers will want to enjoy premium brand gear and experiences in the outdoors more and more as they head into their retirement years.

[winner69]

This is promising from last update about Oboz - Remain on track to achieve the US$7.1m EBITDA earn-out target for the 2018 calendar year


Sort of says going better than expected ....good one

[Lewylewylewy]

I think bik that the best is not a recession, so this company can (and likely will) still be performant, but the SP might represent more of a bargain if the bear continues (which i suspect it won't claw us again until the next major event, which my pick will be something from china)

[Beagle]

https://www.nzx.com/announcements/329075

Very disappointing and difficult to understand. Same store sales growth for the first 15 weeks was up a whopping 7% in Australia and about 5% in N.Z. and that at a time when fuel prices were at record high's. Now we have what many retailers were saying was a boomer Boxing day sale but add another 7 weeks trading and same store sales are down, WTF ? Must have been a really, really tough late November / December other than Boxing day.

Chalk that one up as my first investment disappointment for 2019...hope its not the first of many...

What does this suggest, if anything, for HLG trading over recent weeks ?

[forest]

Partially offsetting lower than expected sales to date for 1H FY2019, is a c. 60 bps improvement in retail gross margins to c. 64%.

I like this improvement in gross margins. Could have more influence on profit growth than the reduction in sales have on profit reduction.

[Beagle]

https://www.marketscreener.com/KATHMANDU-HOLDINGS-LTD-6500917/financials/

Analysts are expecting an 11% increase in eps this year. A 4-8% increase in profit, (today's update) on a 7% higher weighted average number of shares on issue (last year weighted average shares on issue 211.261m, source annual report, currently 226.188m shares on issue) is likely to lead to low single digit eps contraction which is extremely disappointing after previous talk of strong growth. There is no way to sugar coat this, this trading update is a real shocker.

Momentum must have fallen off the edge of a cliff with the last 7 weeks sales for it to drag the first 15 weeks strong sales growth down ! We saw what happened to HLG when they posted a more disappointing trading update so I am OUT and not waiting to see the carnage here.

Very pleased I took just a very small opening position which I liquidated this morning at a small loss.
KMD is also in my Share trader competition picks so I am not off to a good start in 2019.

[winner69]

Didn’t take long for first earnings downgrade for the year on the NZX to come through ...and who would have thought it would be Kathmandu, and what a shocker it is

Beagle — with 10% more shares probably lower eps (depending on how they fiddle the numbers) and jeez that includes extra from Oboz. Bit of a disaster eh

What does Balance say now ....yes, downgrades come in threes (at least)

[winner69]

Xavier the optimistic

“Despite sales being below expectation it is pleasing to see the improvement in retail gross margin and continuing strong growth from the recently acquired Obōz business.”

Balancing sales growth and margins tricky and if your assume Oboz is actually making money the Kathmandu business isn’t increasing profits = they got that sales/pricing a bit wrong

I’d expect prices (promotions) and margins to start declining from here

[Beagle]

Didn’t take long for first earnings downgrade for the year on the NZX to come through ...and who would have thought it would be Kathmandu, and what a shocker it is

Beagle — with 10% more shares probably lower eps (depending on how they fiddle the numbers) and jeez that includes extra from Oboz. Bit of a disaster eh

What does Balance say now ....yes, downgrades come in threes (at least)

Yeah...real shocker mate. For 7 more weeks trading to drag the first 15 weeks that were up on average 6 % (NZ and Aust) down their latest sales results are a real shocker and does not auger well for the remainder of FY19. Last year's eps was 23.9 cps on weighted average shares on issue of 211.261m. I struggle to see them maintaining that eps now...which suggests this goes back to baseline support on the chart in the range of $2.20-$2.40 (PE 9.5-10), maybe even lower until they can prove they can restore eps growth. BIG nasty surprise to kick off the 2019 investment year.

What does this suggest about other retailers November / December trading ?

[couta1]

Didn’t take long for first earnings downgrade for the year on the NZX to come through ...and who would have thought it would be Kathmandu, and what a shocker it is

Beagle — with 10% more shares probably lower eps (depending on how they fiddle the numbers) and jeez that includes extra from Oboz. Bit of a disaster eh

What does Balance say now ....yes, downgrades come in threes (at least) Lost money in this stock a couple of years ago, I like and use their products for skiing but they are too reliant on good seasonal sales for me to ever be a shareholder again. PS-There is plenty of competition now in the winter market.

[Beagle]

Lost money in this stock a couple of years ago, I like and use their products for skiing but they are too reliant on good seasonal sales for me to ever be a shareholder again. PS-There is plenty of competition now in the winter market.

Sure is mate. Some of those jackets we saw at Queenstown were stupidly cheap at the mountain warehouse. https://www.mountainwarehouse.com/nz/
Pleased to be out and shall retreat to my kennel and lick my wounds from this one.

[winner69]

What does this suggest about other retailers November / December trading ?

Lesson ..don’t believe all the hype in the media and these daily updates from Paymark. Makes good reading though and creates a bit of excitment eh

[percy]

It was a great Christmas for a few retailers.Lucky to be up 5% plus.
It was a modest Christmas for most.Lucky to be the same or minus 5% on last year.
It was a very difficult for a lot of retailers.Minus 5% to minus 15%.
KMD's business model has never appealed to me.Sale prices are what I would call normal retail.
You can fool some people some of the time,but not all of the time.

[forest]

https://www.marketscreener.com/KATHMANDU-HOLDINGS-LTD-6500917/financials/

Analysts are expecting an 11% increase in eps this year. A 4-8% increase in profit, (today's update) on a 7% higher weighted average number of shares on issue (last year weighted average shares on issue 211.261m, source annual report, currently 226.188m shares on issue) is likely to lead to low single digit eps contraction which is extremely disappointing after previous talk of strong growth. There is no way to sugar coat this, this trading update is a real shocker.

Momentum must have fallen off the edge of a cliff with the last 7 weeks sales for it to drag the first 15 weeks strong sales growth down ! We saw what happened to HLG when they posted a more disappointing trading update so I am OUT and not waiting to see the carnage here.

Very pleased I took just a very small opening position which I liquidated this morning at a small loss.
KMD is also in my Share trader competition picks so I am not off to a good start in 2019.

Oops, did not think about the dilution of shares. Bad results on second thoughts.

[couta1]

Sure is mate. Some of those jackets we saw at Queenstown were stupidly cheap at the mountain warehouse. https://www.mountainwarehouse.com/nz/
Pleased to be out and shall retreat to my kennel and lick my wounds from this one. Thanks for the link mate, some really nice gear there at sharp prices, will be replacing my 5 yr old Kathmandu gear for some of this.

[Raz]

Lesson ..don’t believe all the hype in the media and these daily updates from Paymark. Makes good reading though and creates a bit of excitment eh

No, a real miss, had heard retail was weak Nov/Dec however if you can't count on stats national wide from Paymark...

[Beagle]

Sales for the 15 full weeks to 11 November 2018:
o Kathmandu total sales growth +8.4% at constant exchange rates*1
(excluding Oboz);
o Kathmandu same store sales growth +6.3% at constant exchange rates;*1

o Same store sales growth by country: Australia +7.1%, New Zealand
+5.2%.

OBOZ
For the first quarter of FY2019:
o Oboz sales NZD $15.7m at a gross margin of 39.8%;
o Remain on track to achieve the US$7.1m EBITDA earn-out target for the
2018 calendar year.

Kathmandu's Chief Executive Office Xavier Simonet said "we have seen
continuing demand for core Kathmandu products, following on from a successful
winter last year. We are also pleased with the continuing strong performance
of Oboz and integration into the Kathmandu Group."

Mr Simonet added "we have achieved good sales growth leading into the key
Christmas trading period, and we expect first half profit to be strongly
above last year. However, as always our first half-year result is highly
dependent on the success of our Summer Sale."

Thoughts....If first half results are so heavily dependent on the summer sale I think Mr Simonet's comment is disappointing and unfortunate.
Better to be more conservative with the language like some more seasoned retailers comments isn't it ! Something like this would seem to be more appropriate.
"Sales for the first 15 weeks provide encouragement but its too early in the season to give any indication of profitability for the first half".
No way HLG would have lead shareholders up the garden path like that is there...

His credibility has taken a hit at least in my eye's. So...leading on from that I can't help wondering, when is the oboz acquisition going to be eps accretive or even profitable ?...couldn't really get any handle on that from the annual report or the annual meeting transcript ? This seed of doubt about how this was handled puts the lack of transparency regarding the earnings of the Oboz acquisition into question. On the face of it the gross profit margin of 39.8% is well below that for the rest of the company's products and on only $15.7m sales I wonder how they worked out the purchase price of $US60m base price plus up to another $US15m earn out ?
This acquisition was stated to be expected to be mid single digit accretive to eps when the share placement was announced in March 2018 to fund it. One wonders why shareholders are not being told if this is profitable yet and if it is mid single digit earnings accretive to eps then why does it appear that eps growth is headed towards being negative ? Something doesn't seem to add up here ?

Don't think I'll go barking up this tree again anytime soon. Once bitten, twice shy !

[winner69]

Partially offsetting lower than expected sales to date for 1H FY2019, is a c. 60 bps improvement in retail gross margins to c. 64%.

I like this improvement in gross margins. Could have more influence on profit growth than the reduction in sales have on profit reduction.

On last years financials a 0.6% points increase in margin improves GM by ~$3m

On the other each 1% change in growth impacts GM by a bit more than $3m (+/-)

Reckon that’s why they used the words ‘partially offsets’

[forest]

On last years financials a 0.6% points increase in margin improves GM by ~$3m

On the other each 1% change in growth impacts GM by a bit more than $3m (+/-)

Reckon that’s why they used the words ‘partially offsets’

Thanks Winner, I should have spend a bit more time analysing the results. Very disappointing this announcement.

[winner69]

Thanks Winner, I should have spend a bit more time analysing the results. Very disappointing this announcement.

I think there was a bit left ‘unsaid’ in this announcement

Late March announcement will be interesting ....hopefully things improve dramatically

[Beagle]

I think there was a bit left ‘unsaid’ in this announcement

Late March announcement will be interesting ....hopefully things improve dramatically

I can't see how that's going to happen. For the latest 7 weeks sales to have had such a dramatic effect on the first 15 weeks (more than double the period) the very latest trading performance must be extremely disappointing. That suggests to me that there's some big discounts coming in terms of very heavy summer discounting promotion activity coming which could impact margin.

Balance reckons downgrades come in three's. So this one, (effectively a downgrade on an eps basis) another in late March when they announce the half year and another one before the annual result in due course. $2.00 is on the cards here I reckon, maybe even a bit lower.

[winner69]

Jeez
I can't see how that's going to happen. For the latest 7 weeks sales to have had such a dramatic effect on the first 15 weeks (more than double the period) the very latest trading performance must be extremely disappointing. That suggests to me that there's some big discounts coming in terms of very heavy summer discounting promotion activity coming which could impact margin.

Balance reckons downgrades come in three's. So this one, (effectively a downgrade on an eps basis) another in late March when they announce the half year and another one before the annual result in due course. $2.00 is on the cards here I reckon, maybe even a bit lower.

Jeez $2 or less, that’s pretty low

[Beagle]

Jeez

Jeez $2 or less, that’s pretty low

I think its plainly obvious we're in a bear market now, (look what's happened to Apple sales, see CNBC.com if you want even more evidence) and KMD will be at best a zero growth eps company for the foreseeable future. People are going to pull their head in with consumer discretionary purchases, (this is not a consumer staple) so the clear risk to flat eps this year is to the downside going forward, if we're not already heading down now.
Ben Graham's well respected valuation methodology was to apply a PE of 8.5 for a no growth company. If they can make 23 cps earnings this year 8.5 x 23 = $1.95.5
If others want to pay more, good luck to them.

The company dropped a really ugly and unexpected downgrade clanger on the market today so a 20-30% correction wouldn't surprise me in the slightest.

There's a massive difference between a strong growth company and a no growth company as you know mate which is why I dropped this thing like a boiling hot potato this morning. When you make an investment mistake for whatever reason, yours's or the company's, in my experience its better to admit it, take the loss on the chin and move on.

[JayRiggs]

Speaking from a customer's point of view. Recently I've been wanting to buy a bag and a few other items at Kathmandu. A few weeks ago in mid December, I saw on their website that sale ends on the 14th January 2019, so I decided to wait a wee bit into the new year before making any purchases.

Is it possible that this lower than expected sales update for the Christmas/Boxing Day period be partly due to Kathmandu making the sale period somewhat extended? Had they made the sale strictly end on boxing day or before end of the year, that would have given customers (like myself) more urgency to rush out and buy everything before the sale was over, and that could have made the December sales figures look better.

[pg0220]

Possibly the worst December weather ever made kiwis not want to go on camp, hence buying less camping gears?

[winner69]

Kathmandu sell twice as much in Oz than they do in NZ

NZ sales been going nowhere for years. Last year they were down.

Yesterday’s announcement said Oz sales slightly down. They won’t be repeating last years strong growth in OZ

Oz the problem for F19 - not this impending recession in NZ

[winner69]

Market Value Added MVA is a measure that shows what the market per se thinks of a company. It is the company’s market cap less shareholder equity (the market value of shareholder equity). Positive MVA is good - adding value to equity and all that (rather than destroying value)

KMD’s MVA at Jan18 was $158m (good).

They acquired Oboz and raised $50m capital and the market loved that driving its MVA to an astounding $323m in Aug 18. Yes KMD’s market cap was $743m (up from $485m in Jan18)

Today KMD’s market cap is $528m and it’s MVA has fallen to a mere $78m

So since announcing the Oboz acquisition (and raising more capital) KMD’s MVA has fallen by about $80m (or cut it in half)

Seems like the market per se thinks Oboz is a bit of dud and worse still still have lost confidence in Kathmandu and it’s ability to perform well in the future.

[winner69]

KMD say nz sales are down 2.4% so far this year

Not unexpected so no surprise. Not really a reason to conclude NZ consumers have stopped spending and the country is heading into a recession.

Not unexpected - just look at the chart below - Kathmandu in NZ not doing that well over the years eh ...and this year year looks like much of the same.

[winner69]

From above chart Kathmandu NZ sales up 1.4% since 2014 (cAGR +0.4% pa)

Core Retail sales in NZ are up 24% in same period .....Clothing, footwear etc sector up 16%

Sort of says Kathmandu in NZ are essentially losers .....fast sales in what has been pretty buoyant times.

Makes you wonder eh.

[winner69]

Interesting that Kathmandu, Briscoe and Hallenstein Glassons always go on about challenging market conditions

Over the last 4 years core retail sales (excludes vehicle related spend) have grown at just under 5% pa (Stats NZ)

Wonder what word they’ll come up if things get really ‘challenging’

[macduffy]

It's just a word, winner. Not fashionable to use words like "problematic", "difficult" or "disastrous" any more.

;)

[Beagle]

http://www.sharechat.co.nz/article/38ae75c9/paymark-points-to-disappointing-retail-sales-over-christmas.html?utm_medium=email&utm_campaign=Paymark%20points%20to%20disappointing %20retail%20sales%20over%20Christmas&utm_content=Paymark%20points%20to%20disappointing% 20retail%20sales%20over%20Christmas+CID_abe4559f88 47715e9448bfcd1142b3df&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle38ae75c9paymar k-points-to-disappointing-retail-sales-over-christmashtml

Paymark data is not adjusted for inflation so in inflation adjusted terms sales for the Christmas period are probably down, (depending upon the inflation rate for calendar year 2018). Doubt its just KMD shareholders that will end up being disappointed with this...

[winner69]

http://www.sharechat.co.nz/article/38ae75c9/paymark-points-to-disappointing-retail-sales-over-christmas.html?utm_medium=email&utm_campaign=Paymark%20points%20to%20disappointing %20retail%20sales%20over%20Christmas&utm_content=Paymark%20points%20to%20disappointing% 20retail%20sales%20over%20Christmas+CID_abe4559f88 47715e9448bfcd1142b3df&utm_source=Email%20marketing%20software&utm_term=httpwwwsharechatconzarticle38ae75c9paymar k-points-to-disappointing-retail-sales-over-christmashtml

Paymark data is not adjusted for inflation so in inflation adjusted terms sales for the Christmas period are probably down, (depending upon the inflation rate for calendar year 2018). Doubt its just KMD shareholders that will end up being disappointed with this...


Auckland's stuffed eh ...going to bring the country down

Even Barfoot and Thompson today admitted Auckland house prices are in decline

[iceman]

Beagle, being an accountant, can you explain to me why Auckland & Northland have 75% of electronic transactions but only 1/3 of sales ?? Is because you buy much cheaper Christmas presents and lots of lattes during shopping, or are we the good folk of Shane Jones' regions still using lots of cheques & cash (but they probably wouldn't show up in Paymarks numbers) ???

[Beagle]

LOL Iceman...have another read mate. I believe the 75% reference is a reference to the fact that Paymark process 75% of the countries electronic transactions and nothing to do with Aucklanders propensity to sip latte's :)

[Beagle]

Auckland's stuffed eh ...going to bring the country down

Even Barfoot and Thompson today admitted Auckland house prices are in decline

Tough times mate. I wonder how Aucklanders will feel not being able to tap into their house ATM money making machine any more ?
I think the fancy boat dealers and luxury car retailers will be struggling !

[Baa_Baa]

The sky is not falling. https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12186577


Auckland's stuffed eh ...going to bring the country down

Even Barfoot and Thompson today admitted Auckland house prices are in decline


Tough times mate. I wonder how Aucklanders will feel not being able to tap into their house ATM money making machine any more ?
I think the fancy boat dealers and luxury car retailers will be struggling !

You guys should use the winky face, unless you actually seriously believe what you both said. ;)

[Beagle]

Sad fact is Baa Baa that a lot of Aucklanders have got used to making more money from their houses than from their jobs and quite a number of them have been drawing down on this increase by extending their mortgages and / or lengthy interest only periods on same. A lot of well healed people have seen their investments take a serious hit over the last few months too. That combined makes the likelihood of acquiring a discretionary high value consumer item at the moment far less likely than it would have been a year or two ago. No winky face because its the truth !

[winner69]

Auckland started outperforming the rest of the country on the downside in the September quarter according to ASB

Signs December quarter worse ....and maybe even heading into recession sometime in 2019

https://www.asb.co.nz/content/dam/asb/documents/reports/asb-regional-economic-scoreboard/Scoreboard-Q3-2018.pdf

[winner69]

Kmd share price still heading down ...216 as I post

Long way from 275 before that recent announcement — is 12% enough punishment?

Hard to believe the share price hit 346 not that long ago

Xavier’s halo losing its gloss.

[Beagle]

Yeap..must admit I saw the opening match price was going to be $2.15 and was tempted having sold out at $2.65 a whopping 50 cents higher last week. Is a 50 cent drop enough punishment is the thought that crossed my mind ? Yeah...NAH...Xavier should have known to be a LOT more conservative with his choice of words, (played far to loosely with the term "strong growth") at the annual meeting update and I reckon he needs a bit more "seasoning" to be a really good CEO so that makes me wonder if whether he might have played far too loosely with shareholders capital with that shoe company acquisition ?

The magic words that investors love to hear "eps accretive" were used in the capital raise but I'm not seeing it. I think the market is starting to wonder too... I think investors have reasonably long memories and will remember he has cried wolf on strong growth and looks set to deliver negative eps growth and I think that dogs the company going forward for quite some time, perhaps indefinitely until they do deliver strong eps growth ?
A number of big name retailers got smashed on the NYSE last night...Target doing well though so I think value is always "on trend" which is not really what KMD is about is it..

[hardt]

Profits are still *forecast* to grow ~5%
I think the bet that they do hit that could be worth it at £2.

[Beagle]

From above chart Kathmandu NZ sales up 1.4% since 2014 (cAGR +0.4% pa)

Core Retail sales in NZ are up 24% in same period .....Clothing, footwear etc sector up 16%

Sort of says Kathmandu in NZ are essentially losers .....fast sales in what has been pretty buoyant times.

Makes you wonder eh.

Somehow missed your post from last week. That really is a profoundly sad indictment on the Kathmandu brand isn't it !

hardt - Yeah profit growth of ~ 5% but on ~7% more shares on issue due to the capital raise for Oboz acquisition, so eps contraction of ~ 2%. Last year's profit looking more and more like the cyclical peak...same for HLG. I think all the talk about using the oboz footprint as a launch pad for Kathmandu international expansion is something the market will want to see hard evidence of being eps accretive before this climbs out of the low $2's again. That could take years.

PS I couldn't help go on the Reserve bank's inflation calculator and compare. KMD's N.Z. sales in 2014 of $141m with their 2018 N.Z. sales of $143m.
This over a period of time when we've had record level's of new immigrants coming here and record rates of tourism but if KMD's sales had of just kept pace with inflation they should have been $147.64m in 2018, let along kept pace with population growth which has been as much as 2.1% per annum over those years https://www.msn.com/en-nz/money/news/population-fast-approaching-five-million-this-year/ar-BBS1a95?ocid=spartandhp.
If sasles had of kept pace with just one of those years population growth, (let alone 4 years of it) sales should have grown from $141m to just on $144m in one year not 4 years.

Its very difficult to come to any other conclusion than that which suggests that KMD is a brand that's mature and in decline in its relevance in the market place in N.Z.
Further, I am sure store rents have gone up by at least the inflation rate over the last few years and looking forward KMD will face very steep labour cost increases in the future with the minimum wage set to rise dramatically in the next 2 years.

The recent arrival of the highly successful and much more attractively priced British chain of Mountain warehouse won't help future prospects either !
www.mountainwarehouse.co.nz I've seen some of their sale prices first hand on a Ski trip in Queenstown last Sept and was blown away with the quality and prices of their ski jackets. $119 for a really good jacket is quite remarkable.

[Sideshow Bob]

Second that with Mountain Warehouse - looked like great bang for your buck. Won't get as many tourists in there store at Five Mile Frankton, as Katmandu in Central Queenstown, but located just by Kmart so will get plenty of locals going past.

[winner69]

Yep beagle Kathmandu almost a non-event in NZ .....flat sales last 4 years and declining profits. This is in spite of a few more stores and this much touted increase in online sales.

Kathmandu sell twice as much (plus a bit) in Aussie than they do in NZ. All the recent profit growth has come from Australia.

An investment in Kathmandu is essentially an investment in Australia retail ....that’s where Kathmandu fortunes lie and the recent announcement announcement said that wasn’t going too well at the moment.

[Beagle]

Second that with Mountain Warehouse - looked like great bang for your buck. Won't get as many tourists in there store at Five Mile Frankton, as Katmandu in Central Queenstown, but located just by Kmart so will get plenty of locals going past.
Mountain warehouse have a great well located store in central Queenstown too.

Yep beagle Kathmandu almost a non-event in NZ .....flat sales last 4 years and declining profits. This is in spite of a few more stores and this much touted increase in online sales.

Kathmandu sell twice as much (plus a bit) in Aussie than they do in NZ. All the recent profit growth has come from Australia.

An investment in Kathmandu is essentially an investment in Australia retail ....that’s where Kathmandu fortunes lie and the recent announcement announcement said that wasn’t going too well at the moment.
Wonder if the collapsing house prices in Australia are starting to make a serious dent in consumer confidence yet or are they about too ?

[winner69]

Stuff I’ve bought from Mountain Warehouse in the UK has been crap .....wouldn’t want to go up the mountains in their gear.

Still a nuisance to KThmandu though

Nice store in Gretna Green though

[JayRiggs]

The past 12 months, I've spent about $750 at Kathmandu. Doing whatever I can to help boost Kathmandu profits.

[minimoke]

The past 12 months, I've spent about $750 at Kathmandu. Doing whatever I can to help boost Kathmandu profits.Good onya. Sorry folks. I pumped a grand into Macpacs coffers instead.