KMD Brands Ltd (ASX: KMD) shares are having a very tough time on Wednesday.
In afternoon trade, the ASX All Ords stock is down 12% to a 52-week low of 66.5 cents.
Why is this ASX All Ords stock sinking?
Investors have been selling this retailer's shares today in response to the release of a disappointing trading update.
According to the release, for the four months ended 30 November, the Kathmandu and Rip Curl owner reported a 12.5% decline in group sales. Management advised that this reflects ongoing weakness in consumer sentiment.
The main drag on its performance has been the Kathmandu brand due to weakness in rainwear and insulation categories in Australia. Kathmandu total sales for FY 2024 year to date are down 21.6%.
Elsewhere, the Rip Curl and Oboz brands reported sales declines of 5.7% and 18.2%, respectively, year to date.
One positive was that its gross margin has improved and operating costs are well controlled and actively managed. However, this hasn't stopped its underlying EBITDA from falling $16 million below last year.
The ASX All Ords stock's CEO and managing director, Michael Daly, remains upbeat. He said:
Black Friday promotions for Rip Curl and Oboz delivered strong sales as these brands continued to deliver good results in direct-to-consumer channels, while navigating short-term weakness in wholesale channels as retailers reduce inventory in uncertain trading conditions. Improvement in Kathmandu's sales performance remains our priority.
We remain focused on optimising gross margin, controlling operating costs, and reducing working capital for all of our brands. We continue to make progress towards our working capital target of 18% of sales for the full year, which is expected to drive strong cash flow generation in the second half year.
