What a difference stock selection can make! This morning New Zealand-based outdoor adventure retailer Kathmandu Holdings Ltd (ASX: KMD) released its results for the half year ending 31 January 2014. Despite facing a currency headwind from a weakening Australian dollar which resulted in sales revenue only increasing 1% compared to the previous corresponding period, net profit after tax jumped an impressive 10.7%.
The market's initial impression of the results was certainly positive with the stock price immediately jumping around 11% to within a whisker of Kathmandu's all time high of $3.52. Highlights from the results include same store sales growth in Australia of 6.6% and an expansion of the gross profit margin by over 1% to 63.9%.
Foolish takeaway
Including today's gains, Kathmandu's share price is now over 70% higher in the past 12-months, providing magnificent returns for shareholders compared against both the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) which is up 7.3% and against many members of its peer group.
Shareholders in Reject Shop Ltd (ASX: TRS) and Myer Holdings Ltd (ASX: MYR) are down 43% and 18% respectively, whilst shareholders in David Jones Limited (ASX: DJS) are sitting on a gain of just 2.5% over the last year.
Investors have now had time to digest the interim results from all of these discretionary retailers and while Kathmandu would appear to be the exception to the rule that retailers continue to struggle against headwinds, it is also a reminder that there is still life in the sector and that some of these knocked-down retailers could be worth revisiting.
