The reaction to Kathmandu's shock profit warning, which wiped more than $100 million from its market capitalisation, eased yesterday, but not before its share price halved on a year ago.
Analysts also warned of the potential for more pain in the half-year ahead, which has become the crucial period for Kathmandu to claw back its losses.
Kathmandu warned on Monday that last year's half-year after-tax profit of $11 million could be slashed to a $1 million-$2 million loss, prompting a shareholder sell-off. Its shares fell 27% to $1.47, wiping $109 million from its capitalisation.
Its shares yesterday steadied around $1.48 but were 52% down on a year ago, having lost $1.66 in value since then.
A warm winter, subsequent surplus stock, profit margin-slashing sales to move that stock and poor post-Boxing Day sales in New Zealand all contributed to the shock update.
The company's Australian operations were a focus for brokers.
Craigs Investment Partners maintains a ''hold'' recommendation on the stock, with a 12-month price target of $1.75, while brokers Forsyth Barr left its rating unchanged at ''outperform'', revising its target price down from $3.30 to $2.55.
Craigs Investment partners broker Peter McIntyre said the weakness was ''primarily in Australia'', with Kathmandu having cited higher-than-expected discounting across the first quarter, plus the negative impact of the sales mix of lower profit margin categories during December and January.
''This weakness comes at a time when the company is undertaking a more aggressive push into the UK and is facing a chief executive transition, which increases the uncertainty and earnings risk over the next 12 months,'' he said.
Forsyth Barr broker Andrew Rooney said sales did not meet expectations in both New Zealand and Australia, noting the warmer winter meant that at the start of its first-half trading, Kathmandu had excess inventory to clear.
''Given the lead time, no changes can be made to its product range for the second-half trading, 2015,'' Mr Rooney said.
However, he noted second-half earnings were historically better and inventory levels had been checked back, but the weakened Australian economy would remain ''challenging''.
