Kathmandu Holdings Ltd (ASX: KMD) has released its FY19 result to the market, is the share price a buy?
Kathmandu was founded in 1987 and now operates in Australia, New Zealand and the UK. It’s one of Australia and New Zealand’s largest outdoor gear retailers and now has over 165 stores across the two countries. The Kathmandu name shares the same name as Nepal’s capital, which is near to the Himalayas.
Kathmandu’s FY19 Result
The outdoor retailer reported that its revenue grew by 9.7% to NZ$545.6 million. This was driven by total same store sales (excluding Oboz) growth of 0.6% at constant exchange rates and Australian growth of 2.7%.
Oboz achieved sales growth of 30% to US$44.6, justifying management’s decision to acquire the business. Online sales grew by 9.2% at constant exchange rates to NZ$48.4 million and now makes up just over 10% of direct sales.
Kathmandu reported that gross profit rose by 5.4% to NZ$332.5 million, EBITDA (click here to learn what EBITDA means) grew by 10.9% to NZ$99.6 million and EBIT increased by 12.7% to NZ$84.3 million.
The net profit after tax rose by 13.6% to NZ$57.6 million.
Kathmandu Dividend And Balance Sheet
The Kathmandu Board declared a final dividend of NZ12 cents per share, bringing the full year dividend to NZ16 cents per share.
During the year net debt declined from NZ$31.4 million to NZ$19.3 million.
Kathmandu Management Comments
Kathmandu CEO Xavier Simonet said: “We were particularly pleased to grow sales in the second half of FY19, even though we were cycling strong Australian sales growth in our key winter period last year.
“At the same time as delivering sales growth, we maintained our focus on cost control, and benefited from wholesale operating cost efficiencies that saw us grow earnings faster than revenue.”
FY20 Trading Update
For the seven weeks to 15 September 2019, group same store sales grew by 6.1% at constant exchange rates. Australian same store sales grew by 4% and New Zealand’s grew by 11.7%, but at lower gross margins.
Is The Kathmandu Share Price A Buy?
Kathmandu seems to be one of the better retailers on the ASX, I particularly like the growth rate that the US business Oboz is generating, although it’s only a small-ish part of Kathmandu for now.
It’s priced at only 11 times the 2019 financial year earnings at the pre-open price, so it does look cheap if it can keep growing profit at a reasonable single digit rate.
But retail is a tough industry, I’d rather buy the reliable shares in the free report below instead.
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