Kathmandu, Rip Curl owner KMD Brands to shut stores as part of $25m turnaround plan

KMD Brands — the company behind outdoor clothing brand Kathmandu and surfwear label Rip Curl — has announced plans to shut stores as part of a turnaround plan aimed at driving growth and profitability.

The ASX-listed company operates more than 300 stores globally across the two brands, as well as its hiking boots label Oboz. It also sells its products through thousands of wholesalers.

During KMD’s investor day on Thursday, group chief executive Brent Scrimshaw unveiled its new Next Level transformation strategy, which would include at least 21 stores being shut. He warned of more store closures pending the outcome of a network review.

It’s understood the store closures were across KMD’s Kathmandu and Rip Curl’s global network.

As part of the overhaul — set to save the company at least $25 million — KMD will also focus on product innovation, speed-to-market, design, as well as deepen its expertise in data to make better decisions.

The company will also roll out new store formats across the three brands, including three Kathmandu concept “stores of the future”, launching in Australia and New Zealand later this calendar year.

It is targeting earnings margin growth of more than 10 per cent over the next three years.

Shares in the company hit a record low of 21¢ last week. The stock closed up 2.3 per cent to 22.5¢ on Thursday.

KMD chair David Kirk said the company was “materially undervalued” by the market. He hopes management changes made over the past 18 months would “enhance” group performance.

These new appointments include a new chief for Rip Curl, Ashley Reade, and the appointment of Megan Welch as boss of Kathmandu. In March, Mr Scrimshaw, a former Nike executive, took over as group CEO from Michael Daly.

“These plans are designed to build stronger brand equity, deepen customer relevance and unlock new commercial opportunities across key markets,” KMD said on Thursday.

KMD in June warned full-year earnings could fall as much as $NZ35 million ($32.3m), with the company blaming Australia’s unseasonably warm autumn.

It expects underlying earnings to be in the range of $NZ15m to $NZ25m, compared with the $NZ50m flagged last year.

Earlier this year, it had to reach out to its lenders to amend financial covenants regarding its $NZ70m in debt.

KMD is set to announce its full-year results on September 24.