Kathmandu CEO warns on supply chain issues

Outdoor clothing and surfwear group Kathmandu chief executive Michael Daly has told investors at the retailer’s annual meeting that it is well-placed for this week’s Black Friday sales, despite supply chain issues continue to be a challenge globally.

Mr Daly, who took the helm in May, said Rip Curl and North American hiking boots company Oboz wholesale orders remain significantly above pre-COVID levels, but supply chain problems are impacting the flow of products into the North American markets.

“Oboz product deliveries will be impacted in the second quarter, as Vietnam footwear factories slowly ramp up production following closures due to COVID,” he told shareholders on Tuesday.

“Demand for Rip Curl wetsuits is exceeding available supply.”

Rip Curl wetsuits are made at a company factory in Thailand.

Freight, logistics, and raw material costs remain elevated which will be managed where possible through increased pricing and raw material substitution.

The Kiwi company is indicating a $NZ35 million ($34 million) hit to profit in the three months ended October 31 because of extended lockdowns in major cities in Australia and New Zealand.

Mr Daly reconfirmed prior comments that COVID-19 had a significant impact in the first quarter, particularly in New Zealand, New South Wales and Victorian markets.

At the group’s investor day on November 9, Kathmandu revealed for the 13 weeks ended October 31, overall same-store sales at Rip Curl fell 9.4 per cent, while at the Kathmandu chain same-store sales slipped by 17.6 per cent.

The company said online sales rose 34 per cent in total, with the Rip Curl business up 11.2 per cent in the e-commerce channel and Kathmandu up 58.4 per cent.

However, he said there is some positive momentum in the short period since reopening in these markets and Rip Curl and Kathmandu are well prepared for the key Black Friday and Christmas trading period.

“Inventory remains sufficient to meet expected demand overall,” he said.

Mr Daly skipped full year guidance due to COVID-19 still impacting the trading environment.

“There is growth opportunity, particularly in the second half year, as we hope to trade the full period compared to lockdowns in June and July last year,” Mr Daly said.

“A key priority is for our brands to increase investment in marketing, sustainability, and loyalty to support our Build Global Brands strategy.”

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