Shares in leading outdoors retailer Kathmandu were savaged by shareholders yesterday after it announced the likelihood of an earnings downgrade because of a decline in sales.
Kathmandu shares plunged more than 25%, from $2.15 to close at $1.64 after the gloomy announcement on expected performance from its chief executive, Peter Halkett, yesterday.
"Trading to date has not met management expectations, and as a result it is now expected that earnings for the first half of full-year 2012 will be less than the $23.2 million earnings before interest, tax, depreciation and amortisation achieved for the same period last year," he said in a statement to market.
Craigs Investment Partners broker Chris Timms said initially a "rogue trade" selling just 3000 shares set the scene, with only a light volume of 34,000 shares changing hands by noon, but by the end of the day 2.5 million shares were traded.
Forsyth Barr broker Peter Young said after beginning to retrace some losses the stock fell again, noting a tranche of 200,000 shares was offered on the market for sale at $1.64.
At its annual shareholder meeting in mid-November, Kathmandu signalled more tough trading conditions were ahead, despite a 16% rise in sales to $56 million for the first 15 weeks of the financial year.
Mr Halkett yesterday said same-store sales during the past five weeks had been less than during the corresponding period last year, but gross margins had been maintained because of stronger sales in New Zealand than in Australia and that subject to second-half trading, full-year profit growth was still achievable.
The company's performance was lower than expected because of weaker consumer spending, he said.
Mr Halkett had a month ago cautioned that the "new normal" for the market was its volatility, along with unpredictability and increasing competition regionally and globally.
