22 Mar 2012

Kathmandu to focus on managing costs

8:13 am on 22 March 2012

Kathmandu will focus on managing costs in the second half of the year after an expenses blow-out hit its first half earnings.

The Australasian outdoor clothing and equipment retailer on Wednesday posted a 43% fall in its profit to January of $6 million, down from $10.5 million last year.

Sales rose more than 15% to $146.7 million, but margins were squeezed by higher costs.

Chief executive Peter Halkett says the result was satisfactory with same store sales growing 8%.

But he says costs were $4 million above budget, including a $2 million one-off cost, spending on a branding revamp, higher rentals and a new distribution system.

Mr Halkett says it's also been difficult as the company moves into Australia, because operating costs there are higher.

He says Kathmandu has invested in systems and infrastructure which will improve efficiency in the future - although it's the reverse at the moment.

Mr Halkett says the company is on track to add at least 11 new stores in the year, and is gearing up for major Easter and winter sales.

Uncertain retail conditions make it difficult to give a full year profit guidance, however.