Kathmandu’s Share Price Rises following a Profit Upgrade

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Kathmandu Holdings Limited’s [ASX:KMD] share price jumped 14.22% higher yesterday, after announcing a substantial increase in profit for 2018.

The company’s shares are currently trading at $2.65 — the company’s highest value since late 2014.

Why did Kathmandu upgrade their profit?

The outdoor retailer’s upgrade in profit is due to higher than expected sales and higher margins across both their Australian and New Zealand stores.

Year-to-date sales for Kathmandu are 7.7% above last year, with gross margins 2.4% higher than the year before due to an improved full price sell-through rate, and a higher average selling price.

Sales were particularly strong throughout Australia, increasing 13.8% in the second half of the year.

Kathmandu is expecting net profit after tax to be between $48–52 million, up from $38 million the year prior.

Kathmandu’s Chief Executive Officer, Xavier Simonet has stated that sales growth is not the only contributing factor to the brands outstanding performance.

Our second half so far has been strong across both Australia and New Zealand, with Australia experiencing double digit same store sales growth. The Autumn season and the start of our key Winter promotion have delivered higher sales and profit than planned. The successful launch of innovative new products, enhanced in-store customer experience, inspiring content and engagement on social media and digital channels, have contributed to the performance.

What’s next for Kathmandu?

Kathmandu has had a great start to the second half of 2018, selling more product, discounting less and achieving a higher average selling price.

The outdoor leisure company seems to be focusing more on their customer’s wants and needs, which is proving to be successful based on this recent profit upgrade.

Moving forward, Kathmandu will release their full year results on Tuesday, 18 September 2018.

Dannielle Rawlings

For Money Morning

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