KMD Brands (KMD) H2 2024 earnings summary

Executive summary

• FY 2024 sales declined 11.2% year-over-year to $979.4 million, reflecting weak consumer sentiment and challenging macroeconomic conditions across all brands and regions.

• Underlying EBITDA fell 52.8% to $50.0 million, with a statutory net loss after tax of $48.3 million, including a one-off $40.3 million impairment of Oboz goodwill.

• Direct-to-consumer and online channels outperformed wholesale, with record online sales for Rip Curl (+8.6%) and Oboz (+31.7%).

• Operating expenses were tightly controlled, decreasing by $19.6 million year-over-year.

• No final dividend declared for FY 2024 due to operating performance and market conditions.

Financial highlights

• Group sales: $979.4 million, down 11.2% year-over-year; gross profit: $576.5 million, down 11.6%.

• Gross margin was resilient at 58.9%, down only 0.2 percentage points year-over-year.

• Underlying operating expenses reduced by $19.6 million (3.6%) year-over-year.

• Net working capital reduced by 9.7% to $198.3 million; net debt at $59.7 million with $230 million in funding headroom.

• No dividend declared for FY 2024.

Outlook and guidance

• Focus for FY 2025 is on stabilizing and returning to sales growth, improving gross margin, reducing working capital, and resuming dividends.

• Early FY 2025 trading: Kathmandu Australia DTC sales up 2.1% year-over-year, New Zealand down 23.2%; Kathmandu gross profit up 5.1%.

• Rip Curl global DTC sales down 2.8% to 5% in a seasonally quiet period; wholesale forward orders moderating from double-digit to single-digit declines.

• Cautious outlook maintained due to ongoing macroeconomic uncertainty and cautious wholesale accounts.