New Zealand Professional Investment Services Firm, Forsyth Barr

Forsyth Barr

New Zealand Professional Investment Services Firm

We are proud to be a New Zealand owned firm, with 21 offices throughout the country and over 300 employees. We assist personal, institutional and corporate clients providing a full range of investment services.

Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

Research is the cornerstone of our advice. We have one of New Zealand's leading teams of analysts. Our global affiliations ensure comprehensive research coverage of all major investment markets.

Equity Bottom-Up

<ul><li>KMD Brands (KMD) provided a disappointing trading update, led by soft winter trading in Kathmandu, and continued wholesale channel weakness for Rip Curl and Oboz.</li><li>While we had expected near-term trading to remain challenging, the consumer backdrop has proven to be weaker than anticipated.</li><li>Accordingly, we materially rebase our earnings forecasts. At this stage, continued cyclical weakness does not change our view that structural challenges within the business can be addressed, and our investment thesis remains intact. </li></ul>

KMD Brands (KMD) provided a disappointing trading update, led by soft winter trading in Kathmandu, and continued wholesale channel weakness for Rip Curl and Oboz.While we had expected near-term trading to remain challenging, the consumer backdrop has proven to be weaker than anticipated.Accordingly, we materially rebase our earnings forecasts. At this stage, continued cyclical weakness does not change our view that structural challenges within the business can be addressed, and our investment thesis remains intact. 

KMD Brands - Consumers Hibernate for Winter

<ul><li>Recent negative trading in KMD Brand's (KMD) Kathmandu business has raised market concerns around the brand's health.</li><li>The key question for us was: how much of the recent challenges are cyclical, and what is more structural?</li><li>Our analysis found that cyclical challenges have been the primary driver of recent trading, however, misexecution on product, price, in-store experience and marketing/branding has exacerbated the problem. </li></ul>

Recent negative trading in KMD Brand's (KMD) Kathmandu business has raised market concerns around the brand's health.The key question for us was: how much of the recent challenges are cyclical, and what is more structural?Our analysis found that cyclical challenges have been the primary driver of recent trading, however, misexecution on product, price, in-store experience and marketing/branding has exacerbated the problem. 

<ul><li>KMD Brands (KMD) reported a sombre 1H24 result, driven by weak sales across all brands which had been signalled at its February trading update.</li><li>Improving Kathmandu's sales performance is the group's key near-term focus ahead of the all important winter sales period. ​​​​</li><li>Wholesale customer destocking continues, and while management signalled this should end in this financial year there was little evidence highlighting any improvement in wholesale channels thus far. </li></ul>

KMD Brands (KMD) reported a sombre 1H24 result, driven by weak sales across all brands which had been signalled at its February trading update.Improving Kathmandu's sales performance is the group's key near-term focus ahead of the all important winter sales period. ​​​​Wholesale customer destocking continues, and while management signalled this should end in this financial year there was little evidence highlighting any improvement in wholesale channels thus far. 

<ul><li>KMD Brands (KMD) reported another disappointing trading update, highlighting a continuation in sales declines for Kathmandu and deteriorating sales rates for Rip Curl and Oboz.</li><li>This comes after a string of earnings downgrades which has seen consensus FY24 earnings per share estimates fall by more than c.-65% over the last two years.</li><li> In its core Australian and New Zealand markets it is also becoming more evident that Kathmandu is losing share to Macpac, who recently reported 1H24 (to December 2023) sales +4% compared to Kathmandu's -22% (to January 2024). </li></ul>

KMD Brands (KMD) reported another disappointing trading update, highlighting a continuation in sales declines for Kathmandu and deteriorating sales rates for Rip Curl and Oboz.This comes after a string of earnings downgrades which has seen consensus FY24 earnings per share estimates fall by more than c.-65% over the last two years. In its core Australian and New Zealand markets it is also becoming more evident that Kathmandu is losing share to Macpac, who recently reported 1H24 (to December 2023) sales +4% compared to Kathmandu's -22% (to January 2024). 

<ul>
<li>We downgrade KMD Brands (KMD) to NEUTRAL from OUTPERFORM after a disappointing trading update for the four months to November 2023, which was significantly below our, and consensus, expectations.</li>
<li>Sales have declined across all key brands due to: (1) continued weakness in Kathmandu and (2) adverse wholesale performance due to inventory destocking by customers.</li>
<li>Despite a gross margin recovery, and cost out measures taken, operating deleverage contributed to a ~-NZ$16m decline in EBITDA for the four months against the prior year. </li>
</ul>


We downgrade KMD Brands (KMD) to NEUTRAL from OUTPERFORM after a disappointing trading update for the four months to November 2023, which was significantly below our, and consensus, expectations.
Sales have declined across all key brands due to: (1) continued weakness in Kathmandu and (2) adverse wholesale performance due to inventory destocking by customers.
Despite a gross margin recovery, and cost out measures taken, operating deleverage contributed to a ~-NZ$16m decline in EBITDA for the four months against the prior year. 


KMD Brands - Tough Climb Ahead; Downgrade to NEUTRAL

New Zealand

Kathmandu Holdings Ltd. provides clothing and equipment for the travel and adventure market. The Company operates retail locations throughout Australia and New Zealand.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Kathmandu Holdings (KMD NZ)

KMD Brands - Consumers Hibernate for Winter

KMD Brands (KMD) provided a disappointing trading update, led by soft winter trading in Kathmandu, and continued wholesale channel weakness for Rip...

Forsyth Barr

KMD Brands - Hitting the Trail

Recent negative trading in KMD Brand's (KMD) Kathmandu business has raised market concerns around the brand's health. The key question for us was:...

Forsyth Barr

KMD Brands - Pulling Its Socks Up

KMD Brands (KMD) reported a sombre 1H24 result, driven by weak sales across all brands which had been signalled at its February trading update.

Forsyth Barr

KMD Brands - Rip Curl Wipeout

KMD Brands (KMD) reported another disappointing trading update, highlighting a continuation in sales declines for Kathmandu and deteriorating...

Forsyth Barr

KMD Brands - Tough Climb Ahead; Downgrade to NEUTRAL

We downgrade KMD Brands (KMD) to NEUTRAL from OUTPERFORM after a disappointing trading update for the four months to November 2023, which was...

Forsyth Barr

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)