KMD Brands reports improving sales trends, particularly in the direct-to-consumer (DTC) channel, for the first five months of FY25. Key highlights (unaudited) for the period ending December 2024 include:
Performance Overview
Sales Trends
- Rip Curl: Global DTC sales up +2.4% YTD, with strong performance during the Christmas period driven by new store openings. Wholesale sales, however, declined -13.4% YTD.
- Kathmandu: DTC sales in line with last year, showing improving trends and positive momentum in New Zealand.
- Oboz: Online DTC sales grew strongly during Black Friday and Christmas, while wholesale sales declined -12.1% YTD.
- Group Online Sales: Increased +18.4% YTD, with all three brands achieving double-digit growth, reinforcing the strategic focus on digital channels.
Total Sales Change YOY
| Period | Rip Curl | Kathmandu | Oboz | Group |
|---|---|---|---|---|
| Q1 (Aug–Oct 2024) | -6.7% | -2.7% | -8.6% | -5.8% |
| Q2 to Date (Nov–Dec 2024) | +2.2% | +1.7% | -5.1% | +1.7% |
| YTD (Aug–Dec 2024) | -2.9% | -0.4% | -7.7% | -2.5% |
Key Updates
- Margins: Rip Curl and Kathmandu gross margins remain stable despite intensified promotions, while Oboz margins declined due to inventory clearance.
- Cost Management: Kathmandu invested an additional $3 million in marketing, product innovation, and customer experience improvements.
- EBITDA Guidance: Expected underlying EBITDA for 1H FY25 is $1 million to $3 million (1H FY24: $15.1 million).
- Net Debt: Forecast at $85 million as of January 31, 2025 (down from $96.2 million in 1H FY24), with funding headroom of approximately $200 million.
Outlook
- The Group anticipates further improvement in DTC sales growth trends in the second half, traditionally its most profitable period.
- A focus remains on reducing net debt below $50 million by July 31, 2025, at least $10 million lower than FY24.
- KMD continues to manage inventory and working capital actively while maintaining strong relationships with its banking syndicate.
Group CEO Michael Daly stated:
“Direct-to-consumer sales trends continue to improve for all three of our brands, while the wholesale market is taking longer to recover. We remain focused on positive sales growth, cash flow maximization, and inventory reduction.”
Upcoming Reporting
- First-half FY25 results will be released on Wednesday, 26 March 2025.
