KMD Brands (KMD) Trading Update summary

Sales performance

• Group sales declined 11.2% year-on-year for FY24, with improvement in Q3 and Q4 compared to 1H.

• Rip Curl sales fell 7.3% for FY24, with DTC sales outperforming wholesale (-2.8% vs -13.0%).

• Kathmandu sales dropped 14.5% for FY24, but trends improved in Q3 and Q4, especially in Australia (-4.5%) versus New Zealand (-16.5%).

• Oboz sales declined 20% overall, but online sales grew 31.7% year-on-year.

Profitability and margins

• Gross margin decreased by 30 basis points to 58.8% due to increased promotional activity in Q4.

• Underlying EBITDA for FY24 is expected between $49 million and $51 million.

• Operating costs were tightly managed, benefiting from prior restructuring and lower variable costs.

Balance sheet and cash flow

• Group inventory at 31 July 2024 was about $25 million lower year-on-year.

• Net working capital reduced by approximately $21 million compared to last year.

• Net debt at 31 July 2024 was $60 million, with funding headroom of about $230 million.