KMD Brands - FY24 Financial Results and Future Outlook
KMD (KMD) Share Update September 2024 Tuesday 24th
KMD Brands Reports Significant Financial Decline in FY24
KMD Brands Limited has released its FY24 financial results, revealing a significant decline in sales and profit across its key brands, Kathmandu, Rip Curl, and Oboz.
Instant Summary:
- Total sales decreased by 11.2% year-on-year to $979.4 million.
- Underlying EBITDA dropped by 52.8% to $50.0 million.
- Statutory NPAT fell to -$48.3 million.
- Operating expenses were reduced by $19.6 million despite global inflation.
- Record online sales for Oboz and Rip Curl.
- Kathmandu and Rip Curl achieved industry-leading NPS.
Financial Performance Overview
KMD Brands reported a total sales decline of 11.2% year-on-year, bringing in $979.4 million compared to $1,103.0 million in FY23. The gross margin remained relatively stable at 58.9%, a slight decrease from 59.1% in the previous year. Operating expenses were tightly controlled, decreasing by $19.6 million year-on-year despite ongoing inflationary pressures.
Underlying EBITDA saw a substantial drop of 52.8%, falling to $50.0 million from $105.9 million in FY23. The company's statutory NPAT also suffered, plummeting to -$48.3 million. This decline is attributed to several factors, including restructuring costs, the notional amortization of customer relationships, and a one-off non-cash impairment of Oboz goodwill.
Operational Highlights
KMD Brands achieved several operational milestones despite the challenging financial environment. Both Oboz and Rip Curl reported record online sales, with Oboz online sales increasing by 31.7% year-on-year to $7.4 million, and Rip Curl online sales growing by 8.6% to $37.9 million. Kathmandu also showed improving online sales trends each quarter relative to the previous year.
In terms of geographical performance, Rip Curl saw strong sales growth in Indonesia and Thailand, while Kathmandu experienced double-digit sales growth in North America and Europe. The company also made significant strides in digital and operational excellence, aligning USA retail point of sale with the Group's technology stack and launching Club Rip Curl in North America.
Brand Strengths and Market Reach
KMD Brands continues to leverage its strong brand portfolio, which includes Kathmandu, Rip Curl, and Oboz. Each brand has a unique market position and a loyal customer base. The company operates over 300 stores globally and sells its products in more than 8,000 locations worldwide.
Rip Curl, founded in 1969, is renowned for its high-quality technical surfing products and has a diversified revenue stream across wholesale, licensing, retail, and online channels. Kathmandu, established in 1987, is a leading outdoor brand in Australasia with a strong focus on innovation and sustainability. Oboz, an American hiking footwear brand founded in 2007, continues to expand its international presence and direct-to-consumer online channel.
The significant decline in sales and profit will likely have a negative impact on KMD Brands' stock price. Investors may react cautiously to the reduced financial performance, particularly the substantial drop in underlying EBITDA and statutory NPAT. However, the company's efforts to control operating expenses and achieve record online sales could provide some reassurance to stakeholders.
Investor Reaction:
Analysts are expected to have mixed reactions to KMD Brands' FY24 financial results. While the decline in sales and profit is concerning, the company's operational achievements and strong brand portfolio may help mitigate some of the negative sentiment. Investors will likely focus on the company's strategic initiatives and outlook for FY25.
Conclusion:
Investors should closely monitor KMD Brands' strategic response to the FY24 financial challenges and assess the potential long-term impacts on their portfolios. The company's focus on digital transformation, operational excellence, and brand innovation will be crucial in maintaining investor confidence and driving future growth.