KMD Brands Faces Challenges Amidst 2024 Retail Landscape

Highlights:

• KMD Brands Limited issues a trading update for the first four months of the 2024 financial year.
• Despite the sales downturn, KMD showcases an improved gross margin.
• KMD Brands reiterates its commitment to achieving a working capital target of 18% of sales for the full year.

Sales Decline Amidst Consumer Caution

In the aftermath of the Black Friday shopping frenzy, KMD Brands Limited (ASX: KMD) issued a trading update for the first four months of the 2024 financial year, concluding on November 30, 2023. The report highlights a 12.5% decrease in group sales compared to the previous year, reflecting persistent consumer uncertainty.

Positive Shift in Gross Margin

Despite the sales downturn, KMD showcases an improved gross margin, crediting prudent management of operating costs. The group's commitment to cost control has contributed to a 10.2% reduction in year-on-year working capital.

Brand-Specific Performance

Kathmandu faces a challenging market, with a 21.6% decline in total sales for the year-to-date period. In contrast, Rip Curl and Oboz, following record sales in FY23, sustain good results in direct-to-consumer sales. However, wholesale sales for both brands have dipped, aligning with retailers trimming inventory.

Looking Ahead

Group CEO Michael Daly acknowledges the short-term challenges, emphasizing the focus on improving Kathmandu's sales performance. With the Christmas and January retail periods ahead, the group anticipates a potential turnaround. The commitment to optimizing gross margin, cost control, and working capital reduction remains steadfast across all brands.

Future Strategies

KMD Brands reiterates its commitment to achieving a working capital target of 18% of sales for the full year. The company believes this will drive robust cash flow generation in the second half of the year. The announcement is authorized for release to NZX/ASX by the Board of Directors of KMD Brands Limited.

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