Markets Live, Tuesday, 9 November, 2021

Ongoing COVID-19 outbreaks in south-east Asia and delivery delays have left outdoor gear retailer Kathmandu with a shortage of wetsuits.

The company this morning reported same store sales (including online) for the 13 full weeks to 31 October 2021 were significantly impacted by ongoing Australasian COVID-19 lockdowns with Rip Curl sales down 9.4 per cent overall and Kathmandu brand sales diving 17.6 per cent.

It notes that Oboz product deliveries will be impacted in the second quarter of 2021-22 as Vietnam footwear factories slowly ramp up production following COVID-19 closures during the first quarter.

Kathmandu told shareholders “demand for Rip Curl wetsuits continues to exceed available supply”.

“Freight, logistics and raw material costs remain elevated as the outlook for supply chain remains challenging. This will be managed where possible through pricing and raw material substitution.”

Kathmandu has also withheld full-year guidance.

“Due to the uncertain COVID-19 trading environment the group will not provide forward guidance, however as markets reopen, trading is expected to improve with growth opportunity in the second half of 2021-22,” the company said.

Online sales continued to be a bright spot with Rip Curl up 11.2 per cent and Kathmandu soaring 58.4 per cent.

Kathmandu says the significant impact on first quarter sales is expected to result in profit being around $35 million below last year’s first quarter. This is due to more severe lockdowns in NSW, Victoria, ACT and NZ than the prior period and “without any direct government subsidies recognised to date in 2021-22.“

“COVID-19 continued to be a major disruption in the first quarter, with Australasian retail stores significantly impacted by lockdowns, and supply chain disruption impacting our ability to fulfil strong wholesale demand,” Kathmandu CEO Michael Daly says.

Performance has recovered as economies reopen ahead of the important Black Friday and Christmas trading period, and the company says inventory remains sufficient to meet expected demand.

Kathmandu says it is managing ongoing supply chain disruption globally, particularly impacting the timely flow of products into our North American markets. Kathmandu shares last traded at $1.51.