Shares in Kathmandu have slumped more than 7% after the outdoor clothing and equipment retailer reported a slide in first-half profit.
The listed company's profit fell 43% to $6 million for the six months to January, compared with $10.5 million last year.
Sales rose more than 15% to $146.7, but margins fell as costs rose.
Sales at stores open at least a year - a key indicator - grew 8%, but earnings were hit by a $4 million blowout in costs.
Kathmandu chief financial officer Mark Todd says operating expenses increased by $16 million against a budget of $12 million.
The company will pay an interim dividend of 3 cents a share.
