KMD Brands Faces Two Testing Hurdles — Market Talk

KMD Brands's capital raise has shored up its balance sheet but Forsyth Barr highlights two key hurdles that the retailer needs to clear. Firstly, NZ$40 million of its renewed debt facility is due to mature in FY27. Analyst Paul Laxton Koraua says KMD must get to NZ$40 million net cash in FY27 to fund its NZ$200 million working capital requirements. Secondly, KMD's debt covenant relief ends by FY27, with renewed terms yet to be agreed. "We think that KMD would be able to traverse both of these without needing additional capital, albeit discipline around working capital and capex is required," Forsyth Barr says. There's scope to release NZ$30 million-NZ$40 million of inventory from the Kathmandu business, Forsyth Barr adds. (david.winning@wsj.com; @dwinningWSJ)