KMD Brands Ltd. Hits Record Low as Sluggish Sales and Warm Weather Take Toll
Shares of KMD Brands Ltd. sank to a record low on Wednesday, plummeting 8.5% to NZ$0.270 in early trading after the outdoor clothing retailer issued a disappointing trading update. This marks a significant drop for the company, with KMD Brands now trading at its lowest level since listing.
The decline comes as KMD reported a 0.5% decrease in group sales for the ten months ending May 2025. A closer look at the numbers reveals that sales within the Kathmandu division, the company’s flagship unit, suffered a more pronounced decline of 6.4% during the February-May period due to lower demand for insulation products. However, KMD notes that with the recent shift towards cooler weather, they have experienced a modest rebound in sales.
In addition to the slowdown in sales, investors are also taking into account the company’s projections for the current fiscal year (FY25). KMD expects its underlying EBITDA (a key measure of profitability) to fall between NZ$15 million and NZ$25 million. This significantly undercuts market expectations, sparking concerns about the impact on the company’s overall performance.
Furthermore, in an effort to mitigate potential risks, KMD has announced plans to cut inventory commitments for FY26 by an unspecified amount. To make matters more concerning, the company also flagged a potential NZ$1 million hit from U.S. tariffs imposed on certain imports. The exact nature and timing of these tariffs are unclear.
CEO Brent Scrimshaw took to addressing market participants in the wake of this announcement, stating that KMD is navigating "challenging market conditions." However, he opted not to announce concrete measures to address these issues at present. Instead, investors will have to wait until September’s investor day when recovery plans will be outlined more fully.
As market analysts begin to scrutinize KMD’s trading update, one question on many minds is whether the company can manage to steer clearer of similar challenges in the future or potentially mitigate their impact better with innovative strategies and a more agile business model.
