Why Kathmandu Share Price Is Down: Profit Guidance Misses

By ,

At time of writing, the share price of Kathmandu Holdings Limited [ASX:KMD] has fallen sharply, down 12.21%, to trade at $2.30 per share.

The fall puts the stock back to square one, trading close to where it was 12 months ago:

KMD Share Price

Source: marketindex.com.au

The latest news out of the company is that its 1H FY2019 profit will not meet management expectations.

In this just released report, Matt Hibbard shows you his top five dividend picks for 2019. Click here to claim your copy today.

Kathmandu profit guidance down

As announced by the company:

Same store sales for the 22 weeks ending 30 December 2018 are below prior year by 1.0% (at constant exchange rates). Same store sales are below prior year by 0.2% in Australia, and below prior year by 2.4% in New Zealand.

In good news for the company however:

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

It thus appears that the sales bump that comes for retail around the Christmas and Boxing Day period, didn’t materialise for Kathmandu.

What’s next for Kathmandu’s share price?

It’s not all bad news for Kathmandu’s share price.

Factors worth considering is that it has a P/E of 11.9, which in retail terms is reasonably healthy, and a dividend yield of 5.13%.

For comparison the P/E of US based Columbia Sportswear is around 23 and it has a dividend yield of 1.14%.

Columbia Sportswear is a similar type of company, and given the negative headlines which have been dominating the retail sector, it is possible to view Kathmandu’s share price in a positive light.

That being said, the recent profit guidance miss is potentially concerning. Australian household debt has become increasingly important, as shoppers have less cash on hand to spend in stores.

Retail sales growth is beginning to trend downwards as you can see below:

Kathmandu Share Price

Source: ABS, Business Insider

Additionally, the retail failure rate has increased rapidly in the past two years.

KMD Share Price

Source: Illion Data Registries

A couple things to consider when looking at retail stocks.


Lachlann Tierney,
For Money Morning

PS: Special 2019 report: The next generation of Aussie income super stars revealed. Hint: it’s not the banks. Click here to claim your copy now.

About Lachlann Tierney

Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest…

Kathmandu Share Price Drops on Dividend Cut (ASX:KMD)

Shares of outdoor leisure retailer Kathmandu Holdings Ltd [ASX:KMD] are trading lower today, on the release of its full-year financial results. At the time of writing the KMD share price is down 6 cents, or 5.11%, to trade at $1.12 per share…

Kathmandu Shares Up on Strong Sales but Outlook Uncertain (ASX:KMD)

Christchurch-based outdoor retailer Kathmandu Holdings Ltd [ASX:KMD] is enjoying a boosted share price. The KMD share price is trading at $1.18, at the time of writing, Kathmandu is showing a recovery of over 152% from the March low…

Which Way Will the Kathmandu Share Price Go? (ASX:KMD)

Today we take a look at the Kathmandu Holdings Ltd [ASX:KMD] share price and look for early signals on the outlook for this retailer. The KMD share price was on a solid run, prior to the onset of the COVID-19 virus. From the high in February 2020 of $2.60, KMD shares…

Kathmandu’s Share Price Rises following a Profit Upgrade

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