Kathmandu hikes profit forecast

Another retailer reports rising earnings

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 February 1, 2013 1:48 pm AEDT

Another retailer is reporting rising profits, in further signs of a recovery in the sector.

New Zealand based retailer, Kathmandu Holdings (ASX: KMD) has raised its first half profit forecast by around 75% over the previous year. Net profit for the six months to December 2012, is expected to be between NZ$9.5 and NZ$10.5 million, compared to NZ$6 million in 2011.

In further signs of 2013 being a good year, Kathmandu expects up to 70% of its full year earnings to be made in the six months to June 2013.

Sales growth for the three months to September rose 20%, while sales for the key Christmas and January period had generally been in line with management's expectations. CEO, Peter Halkett said that sales in Australia are growing at a faster rate than New Zealand.

The company has opened 9 new stores so far in the 2013 financial year, and expects to open a total of 15.

Kathmandu is not the only retailer reporting rising earnings. Specialty Fashion Group (ASX: SFH) reported earlier this week that it expects net profit after tax to almost triple to between $17-$18 million, for the half year to December 2012. And in early November, Country Road Limited (ASX: CTY) announced that sales for the group had increased by 37% in Australasia.

While all three are involved in fashion and clothing retailing, the signs may be there that the sector in general is staging a recovery.

The Foolish bottom line

Investors in other retailers such as Premier Investments (ASX: PMV) will be hoping their companies can emulate the results achieved by the three mentioned above.

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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, 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. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned.

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