Retail Troubles Deepen Across Australia And NZ

Outdoor retailer KMD Brands has reported another disappointing result, with a net loss of $20.7 million for the half-year ending 31 January 2025. Although total sales nudged up 0.5% to $470.9 million, challenges in the wholesale market and heavy promotional activity weighed on profits.

The group, which owns Kathmandu, Rip Curl and Oboz, saw a significant drop in underlying profit. EBITDA plunged 74.3% to $3.9 million, while net profit after tax was a $16.1 million loss. The company also confirmed no interim dividend would be paid.

Outgoing CEO Michael Daly said, “Direct-to-consumer sales have improved for all three of our brands, while the wholesale market is taking longer to recover.” He added that geopolitical uncertainty and cautious consumer spending continued to impact business performance.

Rip Curl remained the biggest contributor to KMD’s revenue, bringing in $278.5 million in sales. However, its wholesale business declined nearly 8%, while online sales grew by almost 14%. Kathmandu posted a 3% sales increase to $156.8 million, helped by a strong second quarter and a 26.6% rise in online sales. Oboz saw sales drop 6.3% to $35.6 million, as wholesale customers remained cautious.

Kathmandu’s higher marketing spend, especially on branding and product innovation, added to operating costs, contributing to a $12.8 million EBITDA loss. Oboz recorded a $2.2 million EBITDA loss, as margin pressure and inventory clearance sales hurt performance.

Incoming CEO Brent Scrimshaw said the group’s future looked positive. “We continue to focus on delivering positive sales growth, improving profitability, maximising cash flows, and reducing inventory,” he said.

The company is still seeking a new Group CFO. Net debt fell by $20 million to $76.2 million, with inventory reductions contributing to a drop in working capital.

Meanwhile, over in the fashion sector, Australian retailer Jeanswest has collapsed for the second time since 2020. Its parent company Harbour Guidance has appointed administrators, with plans to shut down all 90 physical stores, affecting 600 staff. The brand will continue to trade online.

Administrator Lindsay Bainbridge said, “The owners have done everything they can to keep Jeanswest going, but market conditions mean sustaining bricks-and-mortar stores is not viable and unlikely to improve.”

All remaining stock will be sold online and in-store as part of the company’s restructure and wind-down process.

Torpedo7 is undergoing major changes under its new owners, Tahua Partners, with a mix of store closures and rebranding plans announced. The company has confirmed that it will shut down its Rotorua and Westgate stores, while transforming 10 of the remaining 16 locations into outlet-style stores, branded as The Outlet.