Kathmandu sales climb

Good news for the retail sector

Mike King

Mike King is a Fool.com.au Investment Analyst and Writer. He caught the investing bug more than a decade ago, at a time when the U.S. had invaded Iraq and fear reigned in the markets. His initial success as the markets took off encouraged his passion and thirst for knowledge. With 13 years behind him at one of Australia's largest domestic banks, Mike's passion for stocks led him to join a boutique funds management firm, where he stayed for four years. A seven-year stint in equity research at one of the largest investment banks in the world followed that, giving Mike a thirst to pursue his passion further. Mike holds a Diploma in Applied Finance and Investment and a Graduate Certificate in Financial Planning. His passion is to help retail investors invest better, and that passion was one of his primary reasons for joining The Motley Fool Australia in late 2011. Mike has written thousands of articles since joining, including for Fairfax Media, Yahoo!7, Ninemsn and has also appeared on ABC's The Business. You can see all of Mikes' holdings here

Published November 16, 2012 12:12 pm AEDT

Who says retailing is dead? Certainly not Kathmandu Holdings (ASX: KMD), which recorded a 20% increase in sales last quarter.

The outdoor adventure clothing and equipment retailer, Kathmandu, today reported a spectacular 14.3% increase in like-for-like sales for the 15 weeks to 11 November 2012. Total sales rose 19.5% to $66.9 million, with the opening of six new stores around Australia, and the company aims to open a total of 15 new stores in the 2013 financial year.

Kathmandu's Chief Executive officer, Peter Halkett said that despite the difficult trading conditions, sales have been ahead of expectations. However, he added that sales to date are less than 20% of our expected total sales for the year, and that the retailer was heavily dependent on the Christmas and January trading period. The announcement also made no mention of margins, so its hard to determine how much of the increase in sales was due to discounting.

Just yesterday, Country Road Limited (ASX: CTY) announced that sales for the group in Australasia increased by 37%, while same-store-sales increased by 12.2%. At the other end of the scale, Gazal Corporation (ASX: GZL), a fashion wholesaler, with brands like Pierre Cardin, Calvin Klein and Bisley, yesterday reported that consumer sentiment and business confidence remained cautious, and trading results for the first four months have been challenging, and the company was unable to make any predictions in relation to earnings for the 2013 financial year.

Last week, Speciality Fashion Group (ASX: SFH) reported that sales since July had been encouraging, with the company recording low single digit same-store-sales growth, but remained cautious.

The Foolish bottom line

For the majority of retailers, the next two months are the most important of the year. But results so far seem to indicate that the sector is seeing a turnaround, and could see strong sales leading up to Christmas and into the New Year.

As a part owner of Billabong International (ASX: BBG) and David Jones Limited (ASX: DJS), I'm getting cautiously excited.

If you only invest in one company this year, make it our "Top Stock for 2012-13". Operating in two hot markets — one set to double by 2012, the other predicted to grow 5x over the next five years — this stock is a solid growth play that also boasts strong recurring revenue, zero debt, and lots of cash. Get its name and full research case in this brand-new FREE report.

More reading

Motley Fool writer/analyst Mike King owns shares in Billabong and David Jones. The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Automatic Renewal

By taking up this offer, you will also be enrolled in our auto-renewal program, which is our way of making your ongoing subscription easier by ensuring uninterrupted service. Don't worry, though – you're not locked in, and can cancel your auto-renewal at any time before each 'anniversary' date without question or penalty.