Kathmandu is one of several High Street retailers under the blowtorch - Pumpkin Patch has said it could breach crucial banking covenants if Christmas trade falls short of expectations.
Hallenstein Glasson told shareholders this month it was confident of having remedied last December's (2013) 40% revenue drop, in part due to then in-house ''poor execution of planning and buying'', but wants good Christmas trading results.
The Kathmandu Christmas profit warning also follows weaker-than-expected winter sales trading, due to warmer weather.
Yesterday, Kathmandu's acting chief executive, Mark Todd, said that in Australia, the trading performance throughout the Christmas sales promotion period to date was below expectations, reflecting negative consumer confidence and the difficult discretionary retail trading environment.
Its year-to-date sales to mid-November booked an 18.6% increase but, with the impact of Australian sales in the subsequent five weeks, total sales for the year to December 21 stood at a diminished 14.1%.
From a share year high of $4 in April, Kathmandu shares were under further pressure yesterday, down more than 8% before noon, trading at $2.55 - or 36% below April's high.
Mr Todd said due to both the subdued Australian trading, and reduced gross profit margins across the full year to date in Australia, Kathmandu ''will experience a substantial reduction in the gross profit earned'', for the pre-Christmas Day trading period, compared with the same period a year ago.
''While first-half earnings will be down on the result achieved last year, our overall profit result for the full year remains primarily dependent on second-half-year trading, which in full year 2014 contributed more than 70% of our total year's profit,'' he said.
Hallensteins chairman Warren Bell said the period to Christmas was ''critical to our success for the balance of the summer season, but we're confident the business is in a stronger position than it was at a comparable stage last year''.
Mr Todd anticipated ''challenging conditions'' in the Australian market ''may continue for some time'', and as a consequence, management was reassessing Kathmandu's sales and pricing strategy, for the second half trading of the full-year 2015, and beyond.
Mr Todd noted Kathmandu's three major annual promotions - at Christmas, Easter and winter - historically vary in their outcomes between countries, and week-to-week within the promotion itself.
''So there is still the potential for improved performance in the remaining 41 days of trading.
''However, given the results to date and the widely acknowledged negative consumer sentiment in Australia, Kathmandu anticipates any recovery in trading from now till January 31, 2015, will not be sufficient to make up the shortfall in gross profit,'' he said.
• Kathmandu will next update the market in early February and deliver its first-half trading report on March 24.
