The new CEO - Xavier Simonet stepping in should help with this.
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Looks like Fishing Camping and Outdoors are closing down ? or is this just a creative sales pitch and they're moving online only, don't know ?
But if correct and they are closing their 13 retails stores this might help KMD shareholders a bit. That said it looks like sales in Aussie where they have most of their stores are still soft for KMD and all the signs are there that conditions will remain challenging for retail in Australia. Plenty of risk left in this puppy IMHO.
http://www.fco.co.nz/#PR_ONSALE
Bottom line is that although this result was within previously indicated guidelines the market doesn't like it and the stock is now down quite significantly (circa 8.5% at time of this amended comment). The market appears to have been wanting to see a clearly articulated / revised strategy to meet changing retail conditions. Maybe Mr market expected a cessation to the store roll-out until profitability has been restored ?
This slide from their presentation suggests that it isn't just this half year being the problem
Wow look at that declining same store growth chart I have circled. Suggests something fundamentally wrong /not working
At least it is still positive but with declining margins doesn't paint a healthy picture. No wonder the share price has taken another dive today
The new leader has an enormous task ..... good luck to him, he needs it methinks
Hi Winner, the thing that jumped out at me in the HY report, was they stated that: our Xmas trading and sales through January did not produce the sales we expected, our analysis tells us that contributing factors included, "promotional campaigns did not drive the expected foot traffic".
My concern it that they also say their 2016 focus in on increasing on-line sales, a valid part of the business, but with most retailers still stating about 95% of revenues still come from inshore sales, this is no golden egg?
Mobile-centric marketing and increased personalization is the way big retailers are going. The demographic of KMD's customer's would probably suit the products Vmob has to offer, as shareholders it may be worth mentioning.
Wallace D (not Holding, but monitoring)
They are closing all 13 NZ stores, as previously posted:
http://www.nzherald.co.nz/business/n...ectid=11404628
12.4% drop today. A bit of a bigger drop than I expected.
She'll be right. Mr Xavier Simonet's extensive experience with women's handbags will add a much needed feminine touch to Kathmandu and bring more ladies to the shops.
disc: holding
Don't know why I keep buying crap stocks. Hope you're right couta1.
Somebody asked what did the financials actually say.
Comparing H114 to H115 profit before tax is down $16.8m, like $15.0m last year to a loss of $1.8m this year. How come?
Well they did sell quite a lot more. Positive impact $7.5m. Good
Gross margin down 4.6% points from extra discounting and getting rid of excessive stock. Negative impact $8.3m Really bad
More stores more rent. Net increase in rents $3.5m. Part of growth strategy but not matched by increased sales.
More stores and growth probably contributed to increasee in Other Selling Expenses of $6.5m. Not really that good.
Don't know what caused this but Admin and General Expenses were up $6.2m. Doesn't look like things are under control does it.
Put all that together and that's why npbt was $16.8m down on last year.
Store expansion costing heaps but not resulting in increased sales and margins really under pressure. Surely these factors are going to come through H215 as well. A busier half and if things are not quite as bad as H1 I will stick to my $10m to $15m FY15 forecast. But things have to get better eh and this doesn't support a divie anywhere near last years level.
Man on radio said same store sales down last couple of months. Makes that chart I highlighted yesterday even more ominous. Something fundamentally wrong.
Very good analysis there W69.
It seems to me that they need a major restructure / efficiency review. Time for some of the fat cat exec's to take a serious haircut with their bloated salaries / perks ?
I completely agree that there seems to be systemic issues within this company.
*Walk into Kathmandu, want a pair of shorts... no I don't want to pay ~$100. Cya, I'm off to one of the many other outdoor retailers for a lower price!
The end.
You mean you managed to find a time slot without any big sale? Maybe they just had their annual stock take and forgot to put up the next "sale" posters. With Christmas, Boxing day, Waitangi day and end of season sale gone it must be now the Easter sell period. Lol. Nobody buys at Kathmandu unless products are at least 60% discounted ...
It works for Briscoes because they basically invented the disingenuous sale pricing model and have a sale every Thursday and every weekend.
If you're going to use this B.S. sale tactic and grossly inflated prices at other times, (A pricing model I detest), then you need to have really frequent sales and lots of advertising.
Plenty of shorts on sale on website
http://www.kathmandu.co.nz/mens/trousers/shorts.html
My inbox getting daily reminders of the Easter sale and special offers just for me. A bit of overkill really ......supoose a lot of their 1.2 million summit club members feel the same way
Despite my posts earlier I do not claim to be an expert in this company, as I have only bought this company due to it having good returns on operating capital and a strong earning yield over the last 12 months. However, there does not appear to be much logic or long-term outlook involved in analysing the recent announcements.
I think the reaction is much like a dairy shop owner running around with his paints down screaming, as a result of selling 15 bags of ships this month instead of the 20 packs he sold last month. Seems a little to emotional.
But the period before the 20 packs of ships he sold 25 packs of ships and the period before that he sold 30 packs of ships and the period before that he sold 35 packs of ships
Get the picture - no wonder his pants are down.
To be fair the story with KMD is actually selling 1 more pack of ships when everybody thinks he should be selling 3 more packs of ships ..... but then again this morning the man on the radio said he was now selling less packs of ships than before. Ouch
(suppose you meant to say chips)
This part is fine, but the forex kills off most of any medium and long term happiness. Chinese supply deals would be done in USD, and 2/3 of KMD sales would be done in AUD. The profit is then worked out in NZD which goes badly on the NZD side for both of these. Higher cost, lower revenue, less margin.
So, saying that it is okay in the medium and long term is to say that the Australian economy (i.e. forex) is going to be okay in the medium and long term. And most people would say that isn't a sure bet. The Chinese aren't expected to go gangbuster on Aussie ore etc in the next 5-10 years. So, the forex isn't expected to revert suddenly and cut KMD a break.
I'm not saying it is all forex, but it certainly isn't helping and any margin squeeze in the short term on top of this won't help. Exec level decisions can't get around the forex unless they start manufacturing in Australia :-)
Yes, good point - I get what you mean. I would say (think you may have already stated this point) that you would hope companies and therefore investors do not invest and put together business structures based on forex arrangement. It would be a fairly speculative act in my view.
Sound point though - can't do a thumbs up on this.
Be very careful with historical earnings yield...can look increasingly attractive all the time as the SP keeps declining. Classic value trap this one. Consensus brokers SP target 12 months out is still $2.20...was a widespread buy by many analysts last year with a target price of $4. If one extrapolates this, brokers will be rating it a buy this time next year with a price target of $1.10 and the SP will be about 70 cents. Analysts trying to cover their butts while Rome burns ?
Yes, there are other things to look at. But if you look at historical data, historical earnings yield is a good predictor (not all the time) of investment returns for a collection of stocks. Research on the NZX and ASX market shows similar outcomes to the research conducted by value investors on US markets.
I stand by my belief that this company will turn things around given time no matter what anyone else says on here, just saying:cool:
Yeah im a bit of an eternal optimist but then again ive probably weathered a bigger battering on the sharemarket than most on here over the last couple of years and its far from over looking at the red arrow at the bottom of my portfolio by ive learnt heaps and have always found a never say die attitude to come out trumps in the end.
Couta, While I'm not suggesting you are wrong in this case, I consider one of my strengths is admitting that I'm wrong, selling, and redeploying funds. I.e. Sell the dogs, hold onto winners. A never say die attitude is more appropriate to marathon runners, not investment.
Nearly $100m of stock is frightening eh, esp when they only sold $73m of goods in the half year.
They have more than 7 months sales in stock .......hope most of it is what the likes o couta wants / needs. Looks like plenty more sales needed to clear this mountain.
Cash burn ....I reckon only $16m in the half ......only, heck that's quite a lot.
No worries though, a turn around is under way I believe and new big shareholder is happy
Old stock for retailers is a nightmare.It clogs up the whole system.In the shops it takes up valuable space.New stock can not be displayed because of the old stock.So sales are affected.You can not just turn off the supply of new stock as lead times from China/India are often long.Then where do you put the new stock.Store it in a warehouse until there is room in the shops? Discount the hell out of the old stock to make room for new stock? That leads to people buying up the old stock,but stops them buying the new stock. So we see very quickly old stock is near worthless.Glassons used to give their old stock to the Salvation Army.
Maybe we will see The Army advertising $599 puffer jackets at $29.99?
A must read
https://www.nzx.com/files/attachments/210341.pdf
Chelsea from Forbar asked a few questions, I sense an upgrade from them
Me, didn't really inspire me or instil any confidence for the future. But they say they on track for better times couta
Most telling comment - they have a best,better, good ranging strategy .....and bugger me those stupid consumers / customers are gravitating to the good end. Jeez customers are stupid not buying the best stuff.
And it looks like I am a target being a Summit Club member. At least we are going to get cheaper prices, that should help margins? A lot seems to depend on this summit club,
I think Groucho Marx said "I wouldn't want to join any club that would accept me as a member":) More to the point..any business that doesn't control their stock efficiently, both buying and sales segments and allows the stock turnover rate to stretch out is going to be struggling.
Yep, whilst stock at cost is down on the pcp at $97.3m and using a stated GP margin of 59% that suggests a sales value of $237m.
Sales are averaging just on $30m a month so even at the lower stock level as reported this time that's 7.9 months, (call it 8 months for rounding) of total group sales represented by stock as at balance date and that after aggressive discounting to clear slow moving stock as stated by the company !! I'm not quite sure what to make of this other than to suggest some stock must be basically obsolete / no longer in fashion or otherwise extremely difficult to shift ?
Maybe its time for a real sale :)
This is a big part of their problem. Everybody now knows that their sales are not real. You see an item with a price tag of 100$ reduced from 300$ , instead of thinking thats a bargain, you just know that the thing has never actually been sold for 300 in the first place.
Massive stores, filled with fleecy crap, at prices you cant trust.
Apparently there are murmurings that following some 'complaints' the Commerce Commision are looking at the Kathmandu and others about their pricing ......like is the ticket prices real price meaning discounts stated are 'deceptive'
I am not sure what the latest regulations are, but they used to be, an item had to be on display in store for a month at "full price" before it could be shown as a genuine "full price".Stores would get around this by having their "sale" stock arrive in store just a few weeks before "the sale".
In the book trade you could not state "usually"such and such price unless you had had it for sale at that price.The way round it was to put the publisher's recommended retail price,then your sale price.
The Commerce Commission did try to stop publishers/wholesalers/manufacturers putting recommended retail prices.
The other bad practice was retailers advertising 300 only on sale,when they only had 50 to 100.
And another bad practice was advertising a product you had no stock of, to get people into your store,and then saying you had sold out of it,but we have this, which is better value.!!!!! lol.
Hmmmm, Interesting discussion on deceptive trade practice.
I know of one vehicle importer that's well known in Auckland parallel importing high end Euro cars that is currently running an end of financial year sale PROMOTING MASSIVE END OF FINANCIAL YEAR DISCOUNTS...except that it appears most of the cars are the same prices they were in January and February. Fair Trading Act breech ?, you be the judge. (Yes I confess I'm a car enthusiast and have too many saved on my trade me watchlist just in case they're having a real sale at some stage)
I believe the average consumer thinks most retailers have cried wolf so many times Sale becomes spurious marketing noise.
The other day I noticed Fishing Camping and Outdoors having a closing down sale and I'm quite surprised that they really are closing down in due course. Don't get suckered into their first closing down sale though currently on, the really big discounts will come closer to 30 June when the super retail group in Australia that own them are on record as saying they want to shut it down by balance date. This last closing down sale by FCO will provide hot competition for the consumer dollar in this segment for a little while to come. A real sale of goods in this sector is coming in June, mark it down in your Diary :)
One other dodgy pricing activity is Mitre 10 and Bunnings and their find a better price and we'll beat it by 15%
What incentive for either to reduce the price of popular products they both stock - none. Prices stay up and consumer loses out even though they think they getting the best / lowest price.
In some states of the USA this practice is seen as a form of price fixing and illegal.
And in some cases only one of them stocks a certain brand - Is it Bunning's with Ryobi, cannot buy them anywhere else apart from Bunnings.
MITRE 10 mega originally promoted we do have sales our prices are always low, now they have Bathroom events, garden events etc - a sale by any other name
Or the conditions are so complicated, it won't happen anyway, Brisoces have started this now, another who are always on sale, however the difference between them and KMD is they seem to be doing really well.
I anticipate a SSH notice to come through for a holding by a conservative fund/institution.
Another small burden for Kathmandu:
Macpac's Easter sale is being advertised with some "Kathmandu-like" reductions!
:ohmy:
Ryobi at Bunnings and not at M10 so no 'price beating' and consumers pay more than if there was competition. Mitre 10 hooked up with Black and Dekker so no 'price beating' and consumers pay more than they should.
But as long as shoppers reckon they getting lowest price and a good deal its all honky dory
The patchy weather today and forecast (and probably the Easter/Autumn sale) seems to have triggered a few Shortlanders to purchase Kathmandu goodies today.
Surely, I can't be the only one to think that KMD has an attractive P/E ratio and dividend payout. Yes, sales were down last year, but it was an unusually warm winter and made it difficult for retailers see WHS. One hopes for a harsh winter.
http://www.nbr.co.nz/article/who-mig...du-cs-p-170853
"Analysts have flagged that Kathmandu’s rapid share price fall after results were released last week could trigger takeover interest "
Any guesses as to who might be involved with the recent large off-market transactions?
When I read the first paragraph I thought how the gods are conspiring against KMD again with a warm autumn. El Nino last thing they needed
http://www.stuff.co.nz/national/6760...-likely-for-nz
But it's all honky dory ...later on it said 'Looking ahead to the winter months, el nino typically brings "more intense and more frequent southerlies and that will bring more colder conditions"
Yippee
April fools joke ? Still trading on quite demanding multiples given the circumstances. Brokers seem to be picking about $17m earnings for them for the current year, (I'd be very surprised if they make that much), putting a retail stock with a chequered history on mid teens PE. Yeah right, really compelling value there...
How is it they've not managed to engage clients in buying every season? In winter you sell them jackets, hats and gloves then when summer comes shorts, t-shirts and canvas shoes.
I'll be a watcher until there is some evidence they are likely to turn the situation around.
Less risky investments around in my opinion. Not a sector i'd want to be in either.
The dividend yield is a bad way to look at this company as if it is fully paid this year, they are effectively borrowing to pay the dividend.
Future earnings outlook looks shady as well.
New CEO looks promising.
Looking back over the last few years operating costs have spiked quite often, so managements control over costs is the issue here.
It all depends on whether this year is a one off and whether the company can turn around.
They need to focus less on rolling out stores everywhere and more on getting those margins back up.
The rising debt is also a concern, don't want to see another pumpkin patch here.
This weather won't be doing KMD's NZ stores any harm me thinks.
I popped into my local KMD yesterday, it was rather busy and seen multiple sales take place in just a few mins. Mac Pac across the road looked suprisingly empty.
Would be interesting to know what the vibe of KMD stores is like in other areas if anyone else has paid a visit?
There were a couple of people outside my nearest store at 9 this morning .....that's good for KMD I thought seeing it was probably minus something in the wind
Turned out they were staff ...........waiting for the manager to turn up
When I went past ten minutes later the store was open but no customers.
The first snow is on the port hills in Christchurch today, quite a big dump it was too;
I counted a total of only 4 customers in the Tower Junction Kathmandu this morning including myself, but there is just so much competition now.
Within 50m of that Kathmandu shop there is also a Bivouac, a MacPac, a Torpedeo 7 and a High Country.
After looking through them all and being a bit blinded for choice, I ended up buying what we were after, hiking boots for my daughter, from High Country.
On a positive note though, the friendly sales women at the Kathmandu tried to sign me up for the summit club for just $8, which is lower than I thought it was, it used to be $100 if I recall.
WOW !! Factor in the prolific growth of online sales and our ability to buy from overseas GST free, (not sure for how much longer) and that's the problem for KMD right there. Well not quite.
Fishing Camping and Outdoors are still having their closing down sale for their 13 north island branches with prices which really are on sale, not faux sale prices like elsewhere.
News release from the Aussie Met Service, predicting that winter will be warmer but wetter than 'normal'.
Warmer = Bad but Wetter = Good.... so fairly neutral looking to me
http://media.bom.gov.au/releases/157...o-more-likely/
This feels like a stock that is trying to rise, but it being held back by a seller (presumably just one) who every day or so drops a 100k share parcel on it.
Another one first thing this morning.
Google Adwords or whatever has helped them .......more than usual Kathmandu ads pop up when reading about the disaster
Spose that how the world works these days
Also now appealing in store to help raise funds, glad to see they're doing their part. Good on ya KMD.
I see in the Herald this morning that low interest rates are fueling Aussie spending in clothing,footwear and accessories should be good for KMD especially with the winter approaching:cool:
Goldman still purchasing strongly. Tempted for a top up myself.
Bit confused by National Australia Bank Ltd's holding movements, upped holding on the 5th of June by 1% then decreased by 1% today... any ideas?
On a postive note, this El Nino weather is doing wonders for the amount of puffer jackets out and about.
The drop in the kiwi dollar should help here as most sales come from Aussie, that and the masses of snow the Southern skifields have received will see those Aussies scrambling to buy new gear before arriving here on mass come July.
Agreed Couta - translation will be an upside, the impact on margins due to the cost of imported product will be the downside tho.
The heavy winter is looking promising.
Sales here will be relatively warm.... considering it isn't that warm in Australia either at the moment. The Australians love NZ for the snow season. Sales will really pick up. Sounds way too cold in NZ at the moment. Wishing for some sunshine over that side for all.
What's the vibe like in KMD stores across the ditch Food4Thought?
I would say, reasonably warm... stable, probably a slight peak as the winter isn't really that good. Worse than last year for certain, and worse to come this week.
Massive off market trade just went through at $1.80 ?????
30mil shares traded off market @ $1.80.. shame it wasn't on market
Briscoes on board...interesting development.
Take over at $1.80
Congrats to all who got in within the $1.30's :t_up: