Despite continued challenging conditions in the retail sector, Australian earnings are being forecast to increase during the coming year.
During the past year to July, capital expenditure on growth was $24.2 million, including 15 new stores, six relocations and a further $6.1 million on existing stores, including major refurbishments in Brisbane, Auckland, Wellington and London.
There is a target of 180 Kathmandu stores by 2017 in New Zealand and Australia and 15 new outlets are expected to be opened by Christmas 2015. Kathmandu's store tally tops 140 stores.
Kathmandu chairman David Kirk said the company plans to invest $5 million to expand its UK and European business this financial year, in the first phase of a three-year strategy to build its global brand. That might dent earnings growth.
''Providing there is no deterioration in economic conditions, we expected improved earnings from the Australasian business in full-year 2015. However, the overall outcome will be impacted by the UK investment,'' he said in a statement yesterday.
Sales for the year rose 2.3% to $392.9 million while operating expenses increased 4% to $175 million, because of increased advertising and investment in its online business. Kathmandu's gross margin edged up from 63% in 2013 to 63.1%.
Net profit fell from $44.2 million last year to to $42.2 million, but at the top end of its earlier guidance range of $39.5 million to $42.5 million.
Kathmandu shares were down 2.2%, or 7c, to $3.08 after the announcement.
Forsyth Barr broker Haley Van Leeuwen said the result was in line with expectations, but noted New Zealand same-store sales were flat and below expectations.
''The warmer-than-usual winter weather in June, particularly in New Zealand, significantly influenced the result with same-store sales down 16% in June ... but they managed to recover a significant portion of the shortfall in July sales,'' Ms Leeuwen said.
No guidance has been provided for full-year 2015, but trading to date had been strong.
Same-store sales were up more than 30%, but Ms Van Leeuwen cautioned that may have been assisted by extended discounting to clear excess winter stock.
Craigs Investment partners broker Peter McIntyre said Kathmandu historically delivered ''stellar reports', but yesterday's was ''flat across the board'', noting foreign exchange losses were $5.8 million.
He cautioned that Kathmandu's forecast to grow earnings overseas meant investors would be factoring in an increased risk profile; which might soon prompt a broker downgrade.
He noted the company was focused on online sales, which climbed 35% in the year to 5.1% of total sales.
- Additional reporting by BusinessDesk.
