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Kathmandu issues profit warning on back of lockdowns

Fresh lockdowns across New South Wales and Western Australia will cost major outdoors retailer Kathmandu $NZ13 million ($12 million) in lost earnings as Australia’s latest wave of COVID-19 infections begins to affect the retail sector.

Kathmandu, which also owns surfwear brand Rip Curl, told investors on Tuesday it would not reach its predicted full-year sales and profit forecasts due to the lockdowns. The company’s sales are heavily weighted towards the winter period when it sells most of its outdoor gear such as puffer jackets and camping goods.

Kathmandu has said the latest round of Australian lockdowns will cost it $NZ13 million.

Kathmandu has said the latest round of Australian lockdowns will cost it $NZ13 million.

Currently, 40 Kathmandu stores are shut in NSW for a minimum of two weeks and a further 26 stores are closed in Western Australia for the next four days as both states kick off lockdowns in an attempt to combat the new highly infectious Delta strain of the COVID-19 virus.

Combined with the two-week lockdown in Victoria earlier this year, which affected 62 of the company’s stores, the retailer now believed its full-year sales to be around $NZ930 million and its earnings to be approximately $NZ120 million. This includes $NZ20 million claimed by the retailer through government subsidies such as JobKeeper.

This is well below market expectations of $NZ944 million in revenue and $NZ183 million in earnings, with the retailer saying the recent lockdowns and their associated movement restrictions had already had a $NZ13 million impact on the company’s bottom line.

“Uncertainty remains due to the evolving COVID-19 situation in Australia, and this expectation is subject to change,” Kathmandu told shareholders.

The downgrade comes despite a strong start to winter for the brand, with sales tracking broadly in line with pre-COVID levels before lockdowns took their toll.

The company’s Northern Hemisphere operations, where higher percentages of populations are vaccinated and hard lockdowns are rarer, are also performing well, with Rip Curl sales tracking well above pre-COVID levels.

Wholesale orders for the 2022 financial year have grown double digits compared to pre-COVID, the retailer said, and Kathmandu’s footwear brand Oboz is also seeing record sales.

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