KMD Brands faces challenges in fiscal year 2025 with a significant drop in earnings and notable leadership transitions, while online sales show growth across its brands.
KMD Brands, the parent company of prominent outdoor brands Rip Curl, Kathmandu, and Oboz, has encountered a challenging first half of fiscal year 2025 (1H FY25), reporting a notable decline in profitability alongside significant leadership transitions. The company disclosed its financial results for the six months ending January 31, 2025, revealing a slight uptick in sales but serious setbacks in earnings.
For this period, KMD Brands reported a sales increase of 0.5 percent, reaching $470.9 million. However, the gross margin saw a marginal decline of 0.3 percent, settling at 58.5 percent of total sales. Operating expenses rose considerably by 4.2 percent, amounting to $271.6 million. Consequently, the company’s underlying earnings before interest, taxes, depreciation, and amortization (EBITDA) plummeted by 74.3 percent, totaling only $3.9 million. On the profit side, the statutory net profit after tax (NPAT) indicated a loss of $20.7 million, while the underlying NPAT registered a loss of $16.1 million.
Amid these challenging figures, KMD Brands noted a silver lining regarding its direct-to-consumer (DTC) segment, including online sales, which demonstrated remarkable growth across all three brands. The group experienced double-digit growth in online sales year-on-year (YOY), marking it as a crucial area for future expansion. Notably, Rip Curl achieved total sales of $278.5 million, reflecting a slight increase of 0.1 percent compared to the previous year, with DTC sales specifically rising by 4.1 percent. Online sales for Rip Curl surged by 13.9 percent, totaling $21.1 million and representing 11.5 percent of overall DTC sales. However, wholesale sales faced a decline of 7.9 percent due to challenging global market conditions, though forward orders indicate potential for improvement.
Kathmandu also reported an increase in total sales of 3 percent, with the second quarter showing a notable recovery at 6.9 percent growth following a 2.7 percent decline in the first quarter. Online sales for Kathmandu rose by an impressive 26.6 percent, amounting to $20.8 million and comprising 13.4 percent of DTC sales.
In contrast, Oboz encountered more significant obstacles, with total sales dropping by 6.3 percent year-on-year. Nonetheless, the brand reported a robust increase in online sales, which grew by 32.8 percent, spurred notably by Black Friday and Christmas promotions. Wholesale sales for Oboz decreased by 10.6 percent.
Looking forward, KMD Brands aims to enhance its DTC sales while working to bolster profitability in the face of ongoing headwinds in the wholesale sector. Outgoing Group CEO Michael Daly spoke to the company’s future, stating, “Direct-to-consumer sales have improved for all three of our brands, while the wholesale market is taking longer to recover. Global monetary policy settings have been easing, but the return of consumer confidence will take time.”
These financial updates coincide with a period of significant leadership changes within KMD Brands, as Brent Scrimshaw is set to assume the role of Group CEO and Managing Director later this month. Additionally, Ashley Reade, a former executive at Nike, will be stepping into the role of CEO for Rip Curl in the upcoming months. The search continues for a new Group Chief Financial Officer, with Ben Washington remaining as Interim Group CFO until a permanent solution is established.
Source: Noah Wire Services
