Kathmandu half-year profit up 23%

Outdoor clothing and goods retailer Kathmandu is planning to buy US-based Oboz Footwear company

Kathmandu will buy US-based Oboz Footwear company

Profit rose to $12.3 million, or 6 cents per share, in the six months ended January 31, from $10 million, or 4.9 cents, in the year earlier period, the Christchurch-based company said in a statement.

Kathmandu had been focusing on controlling its inventory, Davies said.

Kathmandu said it agreed yesterday to buy Oboz Footwear for US$60 million in cash and a potential earn-out of up to US$15 million based on an earnings target for the 2018 calendar year, and expects acquisition costs of about $2 million.

Simonet said the acquisition would help accelerate the company's worldwide growth as well as helping Kathmandu to diversify its risk profile, adding that the two brands were complementary.

"Striking the right balance between generating sales growth and improving our gross margin has fuelled healthy earnings growth in the first half", Simonet said today.

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But while overall profits were up, sales in New Zealand were down 6.3 per cent. Sales in Australia, which is the company's largest market, rose 1.9 per cent.

Wholesaler Oboz had been selling through Kathmandu for 10 years, and chief executive Xavier Simonet said the team had significant knowledge of the outdoor industry and the United States market that Kathmandu could tap into.

"That's what got them into a lot of trouble a couple of years ago, just carrying too much stock".

Due to the seasonal nature of the company, sales were expected to rise during the second half of the financial year, boosted by its key winter sale promotion, he said.

Oboz is an American outdoor footwear company, founded in 2007, based in Bozeman, Montana.

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Kathmandu is raising up to $15 million from retail shareholders and $40m from institutional shareholders to help fund its acquisition of U.S. footwear company Oboz Footwear LLC.

The board announced an interim dividend of 4c a share.

The company plans to raise $40m, selling 18.5 million new shares at $2.16 apiece to institutional and sophisticated investors in Australia, New Zealand and some other countries, it said.

Kathmandu noted that it has secured A$90m of funding from Commonwealth Bank of Australia and $90m from Bank of New Zealand, as part of its multi-option facilities agreements.

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