KMD Brands FY24 Financial Results - A Year of Challenges and Strategic Adjustments
KMD (KMD) Share Update September 2024 Tuesday 24th
KMD Brands Reports Significant FY24 Loss Amid Challenging Market Conditions
KMD Brands Limited (NZX/ASX: KMD) has announced its financial results for the fiscal year ending 31 July 2024, reporting a significant net loss amidst a challenging economic environment.
Instant Summary:
- Group sales down 11.2% to $979.4 million.
- Net loss of $48.3 million, including a one-off non-cash impairment of Oboz goodwill.
- No final dividend declared due to FY24 performance.
- Kathmandu Australia DTC sales up 2.1% YOY; New Zealand DTC sales down 23.2% YOY.
- Rip Curl global DTC sales approximately 5% lower YOY.
FY24 Financial Performance
KMD Brands Limited reported a significant net loss of $48.3 million for the fiscal year ending 31 July 2024. This represents a 232.0% decrease compared to the previous year. The Group's total sales decreased by 11.2% to $979.4 million, reflecting the impact of weakened consumer sentiment and challenging market conditions.
Gross margin slightly decreased by 0.2% to 58.9%, while underlying operating expenses were reduced by $19.6 million year-on-year, down 3.6%. Despite these cost-saving measures, the Group's underlying EBITDA fell by 52.8% to $50.0 million due to lower sales.
Segment Performance
Rip Curl's total sales decreased by 7.3% to $538.9 million, with direct-to-consumer sales outperforming the wholesale channel. Kathmandu's total sales dropped by 14.5% to $361.1 million, with improvements noted in Australia during the third and fourth quarters. Oboz experienced a 20.0% decline in sales, impacted by post-COVID industry challenges in the North American outdoor footwear category.
Strategic Adjustments and Future Outlook
In response to the challenging environment, KMD Brands has focused on enhancing in-store and online execution, launching new products, and managing inventory investments carefully. The Group remains cautious about consumer sentiment for FY25 but is committed to returning to sales growth and improving profitability.
The significant net loss and decreased sales across all brands reflect the broader economic challenges faced by KMD Brands. The lack of a final dividend and the impairment of Oboz goodwill are likely to impact investor sentiment negatively. However, the Group's strategic adjustments and focus on cost efficiency may provide a pathway to recovery.
Investor Reaction:
Analysts have noted the challenging market conditions and the impact on KMD Brands' financial performance. While some investors may be concerned about the immediate financial results, others may focus on the Group's strategic initiatives aimed at improving future performance.
Conclusion:
Investors should closely monitor KMD Brands' performance in the upcoming quarters, particularly the effectiveness of its strategic adjustments. The Group's ability to navigate the challenging economic environment and return to profitability will be crucial for maintaining investor confidence.