Kmd Brands Limited · NZX:KMD
Kmd Brands — 1H FY24 Earnings Presentation
35 slides from Kmd Brands's earnings presentation, Mar 19, 2024
Slide 1: 1H FY24 Results Presentation
1H FY24 RESULTS PRESENTATION 19 MARCH 2024 Michael Daly Ben Washington Group CEO & Interim Group CFO Managing Director
Slide 2: Outline
OUTLINE 1. 1H FY24 SUMMARY 3 2. FINANCIAL PERFORMANCE 7 3. BRANDS 13 4. STRATEGY UPDATE 17 5. KATHMANDU IN FOCUS 20 6. OUTLOOK 24 7. APPENDICES 28 2 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O N
Slide 3: 1H FY24 Summary
SECTION 1 1H FY24 SUMMARY 3 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O N
Slide 4: Financial Summary
FINANCIAL SUMMARY $468.6m 58.8% $260.6m $15.1m $226.2m Sales Gross margin Operating Underlying Net working -14.5% improvement expenses1 EBITDA1 capital 10 bps -5.7% -66.8% -7.4% 1H FY23 $547.9m 1H FY23 58.7% 1H FY23 $276.4m 1H FY23 $45.3m Jan 23 $244.4m 1. Statutory results include the impact of IFR
Slide 5: Sales History
SALES HISTORY SALES BY BRAND (NZ $m) 547.9 468.6 410.7 407.3 363.7 1H FY20 1H 1H 1H 1H incl. 3 months FY21 FY22 FY23 FY24 of Rip Curl Rip Curl Kathmandu Oboz Total SALES BY CHANNEL (NZ $m) 547.9 468.6 410.7 407.3 363.7 1H FY20 1H 1H 1H 1H incl. 3 months FY21 FY22 FY23 FY24 of Rip Curl Retail Online
Slide 6: Brand Highlights
BRAND HIGHLIGHTS RIP CURL FUSION WETSUIT KATHMANDU OUT THERE REWARDS OBOZ KATABATIC FRANCHISE • The Rip Curl Flashbomb Fusion wetsuit • Launch of Kathmandu's new loyalty program • The new Katabatic 'Wind' strengthens this launched in key global markets, including which rewards members for engaging i
Slide 7: Financial Performance
SECTION 2 FINANCIAL PERFORMANCE 7 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O N
Slide 8: Profit & Loss
PROFIT & LOSS KMD BRANDS Statutory Underlying SALES IMPACTED BY A CHALLENGING CONSUMER ENVIRONMENT NZ $m*2 1H FY24 1H FY23 1H FY24 1H FY23 Var % • Sales -14.5% below last year reflecting ongoing weakness in consumer sentiment. SALES 468.6 547.9 468.6 547.9 (14.5%) • Kathmandu has recorded softer sal
Slide 9: Diversified Sales
DIVERSIFIED SALES SALES BY REGION (NZ $m) 547.9 468.6 410.7 407.3 363.7 1H FY20 1H 1H 1H 1H incl. 3 months FY21 FY22 FY23 FY24 of Rip Curl Australia New Zealand North America Europe Rest of World Total SALES CHANGE 1H FY24 VS 1H FY23 -20.0% -36.9% -7.4% Oboz Licensing / Royalties -2.2% Rest of World
Slide 10: Omni-Channel Performance
OMNI-CHANNEL PERFORMANCE DIRECT TO CONSUMER SALES (NZ $m) Retail Stores Online DTC Online % of DTC sales 450.0 50.0% 400.0 380.1 45.0% 350.0 342.0 330.3 40.0% 300.0 284.5 275.8 35.0% 30.0% 250.0 25.0% 200.0 17.3% 20.0% 150.0 12.8% 12.3% 11.7% 15.0% 100.0 8.8% 10.0% 50.0 5.0% 0.0 0.0% 1H 1H 1H 1H 1H
Slide 11: Strong Balance Sheet
STRONG BALANCE SHEET Key Balance Sheet items and ratios*1 WORKING CAPITAL REDUCTION NZ $m Jan 24 Jan 23 Jul 23 • Net working capital $18m below Jan 23 despite lower sales, and inventory well positioned, $5m below Jan 23. Net working capital 226.2 244.4 219.7 • Inventory balance includes +$3m increas
Slide 12: Cash Flow
CASH FLOW Cash Flow (NZ $m) 1H FY24 1H FY23 Dividends declared (NZ $m) NPAT (9.7) 14.0 Interim Final Change in working capital (13.5) (42.3) 42.5 42.7 Non-cash items 65.4 58.2 35.5 21.3 21.4 Operating cash flow 42.2 29.9 21.3 Adjusted operating cash flow *1 (2.9) (11.8) 21.3 21.3 - 14.2 - 0.0 - 0.0
Slide 13: Brands
SECTION 3 BRANDS 13 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O N
Slide 14: Rip Curl Profit & Loss
RIP CURL PROFIT & LOSS NZ $m 1H FY24 1H FY23 Var % SALES IMPACTED BY WHOLESALE CUSTOMER CAUTION SALES 278.3 306.4 (9.2%) • Total sales -9.2%, cycling record sales last year (1H FY23 sales growth +18.8% YOY). *1 EBITDA (underlying ) 27.4 37.6 (27.0%) • Direct-to-consumer sales (incl. online) -5.0%, r
Slide 15: Kathmandu Profit & Loss
KATHMANDU PROFIT & LOSS NZ $m 1H FY24 1H FY23 Var % SALES REFLECT ONGOING WEAKNESS IN CONSUMER SENTIMENT SALES 152.3 194.0 (21.5%) • Sales have softened since June 2023. A combination of weaker consumer sentiment, the warmest winter on record in Australia and reliance on winter EBITDA (underlying*1)
Slide 16: Oboz Profit & Loss
OBOZ PROFIT & LOSS NZ $m 1H FY24 1H FY23 Var % SALES IMPACTED BY WHOLESALE CUSTOMER CAUTION SALES 38.0 47.5 (20.0%) • Total sales -20.0%, cycling record sales last year (1H FY23 sales growth +124.3% YOY). *1 EBITDA (underlying ) (0.1) 2.9 - • Strong online sales growth +34.2%, benefiting from strate
Slide 17: Strategy Update
SECTION 4 STRATEGY UPDATE 17 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O N
Slide 18: Strategic Pillars Remain Unchanged
STRATEGIC PILLARS REMAIN UNCHANGED BUILDING GLOBAL ELEVATING OPERATIONAL LEAD IN BRANDS DIGITAL EXCELLENCE ESG Expand global footprint and Invest in Group digital Deliver operational excellence Lead in environmental, social invest in world class brand and platforms to deliver a truly to all brands a
Slide 19: KPI Progress Update
KPI PROGRESS UPDATE SHORT-TERM MEDIUM-TERM 1H FY24 performance impacted progress toward EBITDA MARGIN*2 KATHMANDU RETAIL STORE COUNT the Group’s KPI targets. % of sales 15.0% ~200 Strategic plans remain unchanged, with confidence in the Group’s ability to drive towards 158 155 155 158 160 11.3% thes
Slide 20: Kathmandu in Focus
SECTION 5 KATHMANDU IN FOCUS 20 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O N
Slide 21: Kathmandu History
KATHMANDU HISTORY SALES (ANNUAL) 600.0 Kathmandu has faced challenging and inconsistent trading results over the last five years. 500.0 400.0 475.0 428.8 422.2 463.0 • FY19 Sales and EBITDA results were the best-ever for the Kathmandu brand. 357.4 381.6 300.0 200.0 • The following three years were a
Slide 22: Our Challenges
OUR CHALLENGES • Reliance on winter weight product has increased, specifically outerwear. • Breadth and depth of core categories insufficient (beyond outerwear). Outerwear inventory investment overweighted vs. other key categories. PRODUCT • Product innovation has not delivered commercial outcomes.
Slide 23: Our Focus
OUR FOCUS REDUCE RELIANCE ON OUTERWEAR • Innovation and investment in broader categories to address year-round needs. PRODUCT • Faster and more regular product drops. • Expand third party brand strategy.. MEDIUM-TERM AMBITION: $500m Sales REFINE BRAND EXECUTION 16% EBITDA margin • Brand marketing mo
Slide 24: Outlook
SECTION 6 OUTLOOK 24 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O N
Slide 25: Continued Brand Innovation
CONTINUED BRAND INNOVATION RIP CURL: 'THE SEARCH' KATHMANDU: SEEKER, INSULATED OBOZ: COTTONWOOD • Reigniting 'The Search' as the primary TRAILHEAD, EPIQ SE • Launched the new Cottonwood range, product, creative and marketing vehicle. • Our new Seeker range is an insulated active the brand's most sus
Slide 26: Trading Update and Outlook
TRADING UPDATE AND OUTLOOK TOTAL SALES MONTH OF FEB 24 OUTLOOK CHANGE YOY FEB 24 YTD • In the second half the Group will be cycling less challenging sales performance last year, Rip Curl -1.7% -8.2% particularly Kathmandu in the fourth quarter. Kathmandu -2.8% -19.9% • Kathmandu sales performance re
Slide 27: Questions
QUESTIONS 27 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O N
Slide 28: Appendices
SECTION 7 APPENDICES 28 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O N
Slide 29: Our Purpose and Vision
OUR PURPOSE OWNER OF Inspiring people to explore LEADING GLOBAL and love the outdoors OUTDOOR BRANDS OUR VISION To be the leading family of global outdoor brands - designed for purpose, driven by innovation, best for people and planet 29 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O N
Slide 30: Brands with Global Reach
BRANDS WITH GLOBAL REACH We operate over 300 stores globally, and our brands are sold in over 8,000 locations EUROPE NORTH AMERICA ~$105m Sales 24 Owned Stores 13 Licensed Stores +2,000 Wholesale Doors ~$225m Sales 30 Owned Stores 24 Licensed Stores ASIA +3,800 Wholesale Doors ~$40m Sales 77 License
Slide 31: Owned Stores by Brand
OWNED STORES BY BRAND RIP CURL OWNED STORE COUNT KATHMANDU OWNED STORE COUNT 162 162 170 169 169 165 162 160 160 161 160 158 155 155 158 160 Jul 20 Jan 21 Jul 21 Jan 22 Jul 22 Jan 23 Jul 23 Jan 24 Jul 20 Jan 21 Jul 21 Jan 22 Jul 22 Jan 23 Jul 23 Jan 24 31 1 H F Y 2 4 R E S U LT S P R E S E N TAT I O
Slide 32: Appendix 1: Statutory to Underlying Profit & Loss
APPENDIX 1: STATUTORY TO UNDERLYING PROFIT & LOSS GROUP 1H FY24 1H FY23 IFRS 16 Amortisation of Other IFRS 16 Amortisation of Other NZ $m Statutory Leases *1 Customer Relationships *2 Abnormals Underlying Statutory Leases *1 Customer Relationships *2 Abnormals Underlying SALES 468.6 - - - 468.6 547.
Slide 33: Appendix 2: Segment Note
APPENDIX 2: SEGMENT NOTE 1H FY24 1H FY23 SALES (NZ $'000) Rip Curl Kathmandu Oboz Corporate Total Rip Curl Kathmandu Oboz Corporate Total SALES per segment note 278,315 152,324 38,005 - 468,644 306,424 193,968 47,532 - 547,924 SALES (Underlying) 278,315 152,324 38,005 - 468,644 306,424 193,968 47,53
Slide 34: Appendix 3: Balance Sheet
APPENDIX 3: BALANCE SHEET Balance Sheet (NZ $m) Jan 24 Jan 23 Jul 23 Inventories 313.6 318.8 290.4 Property, plant and equipment 84.7 77.9 82.9 Right of Use Asset (IFRS 16) 257.5 264.7 270.3 Intangible assets 696.2 704.8 704.4 Other assets 119.4 117.0 136.0 Total assets (excl. cash) 1,471.4 1,483.2
Slide 35: Important Notice and Disclosure
IMPORTANT NOTICE AND DISCLOSURE This presentation prepared by KMD Brands Limited (the “Company” or the “Group”) (ASX/NZX:KMD) provides additional comment on the financial statements of the Company, and accompanying information released to the market. As such, it should be read in conjunction with th