KMD Kathmandu Brands

[Shareguy]

I recently took a position after selling out some time ago. Future interest rate cuts are going to be a game changer for retail.  Looks attractive trading on a forward (forecast from FB)two year PE of 8.  Announced covenant waivers in my opinion take the risk of any further capital raises off the table, unless it really turns to custard. Have $200M of funding headroom as at 31 July 24. Focus on reducing overheads should reap benefits when customers start spending, which they will... 

Has been plenty of insider buying plus Allan Gray and the NZ super fund have been adding.  Possible M&A.

 

[Shareguy]

https://www.rnz.co.nz/news/business/523942/briscoes-thinking-about-kathmandu-investment

[Gerald]

"Look, I'm not as close to that business as perhaps I should be. Clearly, there are some issues embedded in that business. I'm not quite sure whether it's their summer time business or their winter time business that's the issue. Maybe it's both."

Guess that puts to bed the old Rod Duke taking over KMD yarn.

[Basil]

If it barks like a dog, howls like a dog, wags its tail like a dog, guess what, its a dog !
I think Kathmandu gear is simply too expensive for what it is.

[Shareguy]

Up 18 percent this week. Nice

[Waltzing]

yes .... retail has  got a bid ... BGP did not move though...

[BlackPeter]

trading update:

https://www.nzx.com/announcements/436469

... and actually, this does not look as bleak as analyst consensus.

Yes, revenue is down (as expected), but clearly the slow down was reducing towards the second half. margins down as well, but just by a tiny bit.

After they've done all their numbers I am pretty sure they will come  up with a better earnings than the small loss (neg 1 cts/share) the analysts predicted.

How would 2 to 3 cents sounds? Just dreaming ... I am sure they can find some one - offs, but hey.

Anyway - market seems to be pretty upbeat as well. I wonder why?

[Gerald]

Someone found something positive hiding in that release apparently 

[Waltzing]

go retail!!! 

must be the underlying EBIT ...

• The Group confirms that underlying EBITDA(2) is expected to be in the range of $49 million to $51 million for FY24.
• Group inventory at 31 July 2024 was approximately $25 million below the same time last year, resulting in Net Working Capital being approximately $21 million lower year-on-year.

[BlackPeter]

Someone found something positive hiding in that release apparently 

Someone? Many!

SP up 6 cts (12%) since release of the announcement.

[Gerald]

go retail!!! 

must be the underlying EBIT ...

• The Group confirms that underlying EBITDA(2) is expected to be in the range of $49 million to $51 million for FY24.

Made me wonder if this EBITDA(2) was another "community adjusted EBITDA", but not quite that bad;

Earnings before interest, tax, depreciation, and amortisation, excluding the impact of IFRS 16, software as a service accounting, restructuring, and one-off non-cash items.

Still quite a mouthful. Could have been easier to give free cash flow guidance but might not look too good.

[BlackPeter]

Made me wonder if this EBITDA(2) was another "community adjusted EBITDA", but not quite that bad;

Earnings before interest, tax, depreciation, and amortisation, excluding the impact of IFRS 16, software as a service accounting, restructuring, and one-off non-cash items.

Still quite a mouthful. Could have been easier to give free cash flow guidance but might not look too good.

In a perfect world they would all report on standardized terms. Isn't that why we have IFRS standards?

To be honest, however - not sure I remember any company reporting in their ad hoc financial updates against IFRS terms. They all pick whatever they think makes them look good and is not comparable to competitors and often not even to their own previous reports.

Not good, but that's the way it is.

[Waltzing]

yup need to attend an online seminar before each reporting season to get updated on the whatever some much of PHD's have decided to change something in the General Ledger...

a ledger full of general stuff , or not in the general ledger but an off ledger adjustment...

[Ferg]

Slightly off topic but in response to others I look at IFRS a different way.  Take for example IFRS16 where renting a property turns what is a liability / expense into an asset....IMO it is absurd.  Same can be said for other standards which are driven by US private equity interests which insist on putting a value on everything.  Underlying profit is the business trying to tell you the investor here are the real numbers without the IFRS junk polluting the true P&L.  We should be thankful businesses are prepared to pull back the veil on the real numbers.  That said, not all CFOs are honourable...

[Shareguy]

Well still not great, however it looks like its getting better. The worst is over with a bit of luck. 

Kathmandu sales trends, relative to fiscal year 2023, continued to improve in a challenging consumer environment, with enhanced in-store execution and new products.

Cloth has been cut. No need of new capital in my opinion. Interest rates on the decline. Has the potential to be a multi bagger. Not without risk. However I believe current share price has little downside from here.