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 subsequently plummeted down 62.87% to 90 cents at the time of writing.

ASX KMD Share Price Chart 1

Source: Optuma

What’s happening with KMD shares now

Kathmandu is a large retailer of adventure and travel gear with 167 stores.

Like nearly all retailers, Kathmandu was forced to close its retail network, distribution centres, and have a lot of head office staff work from home as of 25 March in reaction to the government restrictions implemented to combat COVID-19.

It’s easy to see that this would be a drastic change for any retailer. In an announcement made on 27 March, Kathmandu said they had lowered executive salaries by 20% and were in the process of trying to negotiate ‘fair rental outcomes’ with existing landlords.

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What does the future look like for the KMD share price?

Our natural rhythm of life has come to a grinding halt in the current climate.

The market has punished many retailers’ share prices.

But there could be a silver lining out there.

As restrictions ease, and with international travel still not on the cards, people may turn to hikes and other outdoor activities.

All these activities, once available, will require jackets, boots, sleeping bags and so on, which is exactly what Kathmandu specialise in.

ASX KMD Share Price Chart 2

Source: Optuma

In a market announcement made on 5 May, Kathmandu noted that online sales are 2.5–3 times higher than this time last year, which says to me that people are already itching to get out of the house.

Meaning despite the sharp sell-off, Kathmandu may be able to bounce back from the pandemic.

Taking the technical view, the KMD share price is sitting nearest to the support level of 88 cents. The next level of support of 66 cents may also come into play. Conversely if price moves up, then levels of $1.15 and $1.40 may come into focus.

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Carl Wittkopp,
For Money Morning

Carl Wittkopp writes for Money Morning and has a diploma in Financial Planning. He specialises in technical analysis.

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