KMD Brands (KMD) Trading Update summary

Trading performance and sales trends

• Group sales declined year-on-year, with 1H FY24 down 8.4% and 2H FY24 to date down 8.4% as well.

• Rip Curl and Kathmandu sales improved in 2H compared to 1H, but Kathmandu's winter sale started 11.5% below last year.

• Rip Curl's direct-to-consumer sales in the USA and Europe showed positive single-digit growth at the start of summer.

• Oboz online sales grew 28.9% year-on-year for the 10 months to May 2024, driven by promotions and new products.

• Wholesale customers for Rip Curl and Oboz continue to reduce inventory due to a challenging consumer environment.

Financial outlook and cost management

• Group gross margin remains resilient, with operating costs tightly controlled.

• Underlying EBITDA for FY24 is now expected to be approximately $50 million, reflecting recent sales trends.

• Funding headroom at 31 July 2024 is projected to be around $200 million.

• The Group has proactively lowered its FCCR covenant ratio for the next three measurement points with banking support.

• Focus remains on cost control, working capital moderation, and cash flow maximization.

Market environment and management commentary

• Consumer sentiment remains subdued globally, especially in New Zealand, due to ongoing cost-of-living pressures.

• Management is prioritizing optimization of Kathmandu winter and Rip Curl Northern Hemisphere summer trading.

• Tactical responses are being made to competitive market dynamics.

• Six weeks of peak trading remain for Kathmandu and Rip Curl, which could influence final FY24 results.

• Announcement authorized by the Board of Directors.