Consumers Cut Back on Kathmandu and Rip Curl Gear

Higher living costs are making surfers and outdoor enthusiasts rethink big purchases, impacting sales at Rip Curl and Kathmandu stores. The parent company, KMD Brands, has reported a significant loss for the first half of the year, skipping its interim dividend and warning of weaker profit margins. Extreme weather in late 2023 also hurt business, with ex-tropical Cyclone Alfred cutting into Rip Curl’s performance by shutting stores for 100 trading days.

KMD Brands, which owns Rip Curl, Kathmandu and Oboz, has been feeling the pinch as shoppers remain price-conscious. Consumers are delaying buying wetsuits, puffer jackets and outdoor gear, similar to how they are cutting back on dining out. While sales for the half-year rose slightly to NZ$470.9 million ($428.6 million), losses more than doubled to NZ$20.7 million from NZ$9.7 million a year earlier.

Despite meeting the higher end of earnings guidance, KMD faces ongoing pressures. While sales at discount outlets are holding up well, full-price stores are struggling. Kathmandu’s earnings dropped 22.3% to NZ$22 million, affected by increased promotional activity and shrinking profit margins. Rip Curl saw a modest 0.1% increase in sales to NZ$278.5 million, but earnings fell nearly 23% to NZ$16.1 million due to global wholesale declines. Oboz, known for hiking boots, faced a 6.3% sales decline, with losses widening significantly.

Looking ahead, KMD expects challenging conditions to continue, with price-sensitive shoppers making fewer discretionary purchases. While a potential improvement in consumer sentiment and interest rate cuts could help, competitive discounting in the sector is likely to keep margins under pressure. The company also confirmed a leadership change, with a former Nike executive stepping in as the new CEO.

Source: The Australian, Board Sport Source, KMD