KMD Brands (KMD) investor relations material

Executive summary

• Sales grew 1% year-over-year to $989.0m, driven by strong direct-to-consumer and online channels, offsetting wholesale softness.

• Underlying EBITDA declined to $17.7m from $50m, reflecting margin pressure and higher operating expenses; statutory EBITDA was $50.5m.

• Net loss after tax was $93.6m, including a $45.4m non-cash impairment of Oboz intangible assets; underlying net loss was $28.3m.

• Inventory and net debt reached three-year lows, supporting positive operating cash flow and improving the balance sheet.

• No final dividend declared for FY25 due to challenging conditions.

Financial highlights

• Group gross margin declined to 56.5% (down from 58.4%) due to increased promotions and inventory clearance.

• Operating expenses increased to 54.8% of sales, with continued investment in brand marketing.

• Net debt decreased to $52.8m, with $235m in funding headroom and all bank covenants met.

• Net working capital reduced to $157.7m, 15.9% of sales, with stock turns improving to 1.65x.

• Online sales were a standout, with all brands achieving double-digit growth; Kathmandu and Oboz online sales up 9.3% and 18.3% respectively.

Outlook and guidance

• FY26 targets include group gross margin slightly above 2H FY25, flat operating expenses, and net debt below $40m by July 2026.

• $25m cost reset underway, with $15m to be reinvested and $10m net savings expected; $5m annualized cost savings from restructuring.

• EBITDA margin ambition of 10% over three years, with gross margin targeted at 60% and operating expenses at 50% of sales.

• 14 store closures and 6 new store openings planned for FY26, including 3 new Kathmandu flagship stores.

• EBITDA margin expansion expected in FY26, especially in the second half.