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.

While this all looks great, uncertainty still looms.

ASX KMD Share Price Chart 1 - Kathmandu

Source: Optuma

What’s been happening at Kathmandu…

In a recent article we discussed the major fall Kathmandu’s share price suffered with the onset of the novel COVID-19 virus.

At the time the price was trading at 90 cents, and while their shares have absolutely gone up, there is still the cloud of uncertainty hanging overhead.

Kathmandu released a market update on 2 July 2020 (today), which noted that sales for the group are up 15.1% for the 10 months ending 31 May 2020.

Along with online sales being up 78% from 18 May to 28 June 2020 and for the same period, Rip Curl — also owned by Kathmandu — reported online sales were up 151%.

Group CEO, Xavier Simonet, noted:

Whilst we are pleased with the strong recovery in direct to consumer sales over the past six weeks, we remain cautious about medium-term levels of consumer demand. We believe that some short-term factors, including Government support packages and pent up demand are underpinning current sales. The heightened level of uncertainty that currently exists is likely to persist over the medium-term.’

Where to from here for the KMD share price?

While the stock price is going up, so is the infection rate of COVID-19. In Victoria there is a large spike in cases along with new recorded cases in both New South Wales and the Northern Territory.

A worrying sign for both business and the community at large.

For a retailer specialising in outdoor and adventure gear, if another full lockdown were to happen, it could have far-reaching consequences.

Kathmandu Share Price Chart 2

Source: Optuma

On the technical, the price is hovering around $1.18 and on very high volume.

Volume is not pushing the price higher, which can indicate indecision between the buyers and the sellers. But who is in control of the move right now is hard to say.

Should the price move to the upside then levels of $1.21 and $1.35 may provide future resistance.

Conversely, should a pullback occur, then levels of $1.12 and 96 cents may become the focus.

That’s why, if you are looking to stay ahead of the curve in finance, our publication Money Morning is a fantastic place to pick up investment stories before they hit the mainstream press. It will come to your inbox six days a week, and I strongly encourage anyone trying to become a better investor to subscribe. It’s free and you won’t regret it.


Carl Wittkopp,
For Money Morning

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

Money Morning Australia