Recovering Kathmandu buys US boots brand Oboz as profits soar
Outdoor apparel and equipment specialist Kathmandu has bought a US footwear company as it refocuses on international growth.
The dual-listed Australia/New Zealand firm has bagged hiking boot wholesaler Oboz for US$60 million, which marks its first move abroad since it shuttered its lossmaking UK stores and cancelled its European expansion plans three years ago.
Back then, CEO Xavier Simonet said further international growth for the under-pressure firm would be all about less risky (and less expensive) channels such as online and wholesale rather than investing heavily in stores.
Now on the recovery trail after the product line was revamped and it fought off a hostile takeover bid, Simonet said the time is right to look abroad as the New Zealand market has little room for growth, even though there’s still opportunity in Australia.
"Acquiring Oboz is consistent with our international growth strategy to pursue a lower risk model because Oboz is a pure wholesale player," he said. "It also advances Kathmandu from being a Australasian retailer to being a global outdoor apparel and equipment brand."
Oboz targets the backpacker and hiker markets and sells its products largely through outdoor retailers and sports retailers in North America, as well as through online sellers.
It has had a 10 year relationship with Kathmandu and initial talks about the takeover began two years ago. Its annual sales are around $30 million and it has grown at 40% annually in recent years.
Meanwhile Kathmandu also reported its six-month results to January 31 on Tuesday. Net profit rose 23% and reached NZ$12.3 million/A$11.5 million while revenue rose 4.3% to NZ$204.8 million.
The company also said that the latter part of the Christmas trading period saw good sales momentum and this continued into February and March. The company's biggest market, Australia, saw total sales rising 9.6%. But New Zealand was weaker and sales fell 6.4% as there was less stock available for clearance. However as mentioned, recent trading has been strong and group sales have risen nearly 8% in the six weeks to March 11.
"Striking the right balance between generating sales growth and improving our gross margin has fuelled healthy earnings growth in the first half," Simonet said.
"We are focused on delivering profit growth in our core markets for the second half of FY18," he added, but he also said that the success of the full year will be affected by the key promotional periods ahead.
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