2 May 2013

Discounting may account for Kathmandu sales growth

7:12 am on 2 May 2013

An analyst at Craigs Investment Partners says Kathmandu may have had to squeeze its margins more than it would have liked to boost recent sales.

Shares in the outdoor clothing and equipment retailer rose by as much as 10% on Wednesday after the company reported a strong end to its Easter sales promotion.

The company's March quarterly sales were hurt by a longer than usual summer but in the last four weeks improved due to a return to more normal autumn weather.

However Craigs Investment Partners head of private wealth research Mark Lister said Kathmandu may have had to heavily discount its stock to make sure it sold.

He said sometimes retailers can have quite strong sales, when their profits are not as strong, because they have had to discount items to move inventory.

Mr Lister said it's not yet known whether that is the situation for Kathmandu, although their sales growth is going well at the moment.

Still, Mr Lister said the company seems to be in good health overall and Kathmandu is still looking at rolling out 10 to 15 new stores each year.

He said total sales rose 12.5% for the 13 weeks to the end of January, compared with the same period a year earlier at constant exchange rates.

Mr Lister said the retail sector is still tough with subdued consumer spending.

He says Kathmandu has 42 stores in New Zealand and six in the United Kingdom, but it's focus is on growing its 81 Australian outlets.